Group assigns the plan to a Plan Group; the dropdown only appears once at least one group exists. On the website customers choose the group first and then see only the plans inside it, and the plans list in the admin uses one tab per group.

The dropdown is filtered to keep groups "pure": a Custom plan can only be placed in a group that contains no Preset plans, and a Preset plan only in a group with no Custom plans. The plan's current group is always kept selectable; if it breaks the rule you see the warning "This group already offers portion choices. Custom plans should be in their own group, otherwise customers are still asked to pick a portion at checkout."

If your store has active groups, a plan without a group is never shown to customers (it is treated as retired), so always assign one.