“Groups” post notification

I understand that one can set up post notifications by category.
However, what are “groups”? Are these labels I (admin) assigns to each subscriber? Can a subscriber only be part of one group? Can subscribers manage which groups they are a part of?

My goal is to have several different post notifications for posts created in different categories. I want my users to be able to subscribe to as few or to as many of these post notifications as they would like.