Start from what you already know: a "bookmark", which describes a placeholder for a web page you use frequently.
Then, favorites. Favorites are just another way of organizing and displaying bookmarks.
Then, tabs. Tabs as applied to browsing are supposed to be convenient placeholders for what would otherwise need to be separate windows.
Then, tab groups. You can create a bunch of Bookmarks organized in Tabs, and create a Tab Group from them.
Then, tab group favorites. You can add any number of Tab Groups to those Favorites.
Apple created all these myriad ways of organizing things in response to people who used some other browsers that had features they thought were advantageous. That first gave rise to "tabbed browsing" and everything that followed. It's a short lesson in "give the people what they want" which can certainly result in confusion and chaos, but we're only talking about Safari here so what's the harm in that.
Every time I watch someone else use Safari I'm nauseated at how horrendously disorganized it appears. But that's the point. It's personal. If it makes sense to them, who am I to judge. I wouldn't want to see their living room.
The short answer is that if you don't perceive an advantage to organizing bookmarks under Tab Group Favorites there probably isn't any.
