Why groups
Once you have more than a handful of instances, the Library gets cluttered fast. Groups let you fold related instances into named folders, "1.21 Forge servers", "Vault Hunters playthroughs", "Old packs I want to keep around", and only expand what you need.
Groups are purely organizational. They don't affect how instances work; an instance in a group launches identically to one at the top level.
Creating a group
The simplest way: drag an instance onto another instance. GDLauncher creates a new group containing both, names it after the target. Rename the group from its header context menu.
You can nest however many instances you want in a group. Each group can be collapsed to keep the library short.
Moving instances between groups
Drag and drop. You can also drag an instance out of a group, back to the top-level Library, by dropping on the empty area.
Dragging onto a group header drops the instance at the end of that group. Dragging onto a specific position within a group lets you place it at that exact position.
Favorites
Right-click any instance → toggle Add Favorite. The instance gets a yellow star on its tile and also shows up in the Floating Favorites Bar at the top of the Library, regardless of which group it's in.
Useful when your "currently playing" instance is buried in a group three folders deep, you can favorite it and launch from the bar instead of digging.
Remove the favorite the same way: right-click → toggle Remove Favorite.
Group by folder vs auto-grouping
Everything above describes the Library when "Group by" is set to Folders, the manual mode where you drag instances into folders yourself. The same Group-by dropdown also offers Game Version, Modloader, and Modpack Platform. Pick one of those and GDLauncher hides your folders and re-buckets every instance automatically into collapsible sections (1.21.1, 1.20.4, Forge, Fabric, CurseForge, Modrinth, etc.). That auto-grouped layout is read-only: you can't drag, reorder, or make folders inside it. Your folders still exist; switch back to Group by Folders any time to see them.
What you can't do
Nested groups (a group inside another group) aren't supported and aren't on the roadmap. Each instance is in exactly one group (or none, at the top level). If you find yourself wanting deeply nested organization, naming groups well, "MC 1.21 Forge", "MC 1.21 Fabric", tends to work better than trying to fight the flat structure.