Taxonomies are types of tags. The default WordPress post uses post_tag (that are the standard tags) and category but other plugins can add their own taxonomies.
Before working with tag groups, you should figure out which taxonomies you want to use. Activated taxonomies will have a “Tag Groups” submenu under the menu where you find their posts.
The list shows also taxonomies that are not visible. Activate only those where you need the group functionality.
The plugin works best with post tags and other flat custom tags. It is not recommended to activate more than one taxonomy per post type, and some features won’t work with hierarchical taxonomies, such as categories. You can see the post type by hovering the mouse over a taxonomy.