Ad Groups allow you to group two or more ads so they are rotated before the main rotation in the Placement. Ad Groups are usually used for if you have multiple creatives that you want to test or that are from the same advertiser.
As an example, say you have 3 advertisers and each is paying $100 for a third of the time in your header Placement. Now let's say Advertiser 1 wants to show a new ad that they created and they want to have the new ad show half the time. Advertiser 1 doesn't want to pay extra and should still just get a third of the impressions. To facilitate this, you would use an Ad Group. You would target the two Ads from Advertiser 1 to a new Ad Group and target the Ad Group as a whole to the Placement.
The ad server will shuffle the Ad from Advertiser 2, the Ad from Advertiser 3 and the Ad Group from Advertiser 1 together. If the Ad Group from Advertiser 1 is selected, the ad server will shuffle it and pick one of the Ads in the Ad Group to be displayed.