Take a look at this worksheet snippet. What do you see?
Right off the bat, you should notice is that rows 11 to 15 are grouped and hidden from view. A closer look should also tell you that rows 3 to 8 are hidden.
Essentially, both features are doing the same thing, but the Group feature gives you an obvious visual cue with the plus (+) sign that something is hidden. The actual Hide feature has no indicator other than the missing row numbers, so it is very easy to miss. The other benefit of using the Group feature is that you can quickly expand or collapse the hidden rows.
To group rows or columns, just select the rows by clicking in the row number or column letter areas. Then click the Group icon on the Outline group on the Data tab.