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These groupings are ways to arrange your site based on the structure of your organization. You will have your Organization and at least 1 department, though those can be the same thing.
The Organization- This will be the overarching organization that is hosting your events.
For example, if you worked for a school, your organization might be the district (e.g. Morris School District) or might be the the school itself (e.g. Madison High School).
The Department- This will be the subgroups within your organization.
For example, if your organization was the district, this would be the individual schools (e.g. Madison High School, Morris High School, etc.) , and if your organization was the school, this would be its departments (e.g. Choir and Band).
You also have an option to create a department group, which is a way to link departments together. for more information, view this tutorial.