In settings > contacts what is the purpose of "show groups in contact list"

In my setup, i see no difference regardless of the setting, and am wondering what it is supposed to do. Found my way to it because I was hoping to be able to turn off the display of “group” labels in the contacts list - which I find very distracting.

Groups will be visible in some sort options.

So for example, when sorted by tag, you can see the tag groups Business, Home, Personal, etc. You can also see I have collapsed the Unsorted group, whereas the others are expanded:

If I unselect the option to show groups in contacts, it will look like this: