What are Item Groups?
There can be certain items under a menu that require a different set of charges or taxes from the rest of the items. These items with the same set of attributes can be clubbed under an Item Group. The item group can then be associated with the corresponding charge or tax.
For instance, consider fast-food joint selling pizzas and burgers. The size of the packaging will be different for pizzas and different for burgers and hence the cost of packaging. To handle 2 different types of Packaging Charges, we can have 2 item groups, one item group with all pizza items and one item group with all burger items and have the 2 item groups added to the 2 different packaging charges.
How to Configure Item Groups?
To create an item group, go to Configuration -> Groups -> Item Groups, and then click on Add New Item Group.
In the New Item Group page, follow the pointer's below
Title: Enter the name of the item group
Description: Enter the description of the group, this field is optional.
Items: Clicking in the box, gives you a drop-down of all the items from the menu. Click on the necessary items to add to the group.
Once done, save.
Associating the Item Group
Once the Item Group is created, you will be able to associate it to a Charge or a Tax, by deleting the default item and location pair and associating the pair you've configured.
Here's an article on Tax creation and Charge creation.