A Group is a comprehensive way for multiple people to collaborate and organize their activities. Groups can be used to send email to every member of the group, but this is not the full extent of their functionality: they can have shared files through OneDrive, a list of tasks through Planner, a site, and much more. Additionally, Groups can be seen and joined (if not private), and members are able to leave.

A Contact Group, however, is only visible to its creator, and cannot be joined or left. It is simply a list of contacts in the creator’s address book. It is also known as a distribution list, and it is only used for sending email to every member.

For more on Groups, see Microsoft’s article on Groups. For more on Contact Groups, see Microsoft’s article on Contact Groups.