There is a new Azure AD feature that allows you to create O365 groups through the Azure Access Panel. This feature is in Preview (Beta) but this blog post is a walkthrough of this as well as exploring the value of O365 Groups.

You can still create groups in the OWA web Interface as well:

These groups are mighty powerful. Not only can they function as AD security groups (in the Cloud only as they don’t sync down to on-premises (yet), but they also function as email distribution groups and shared calendars. They also provide group chat and file sharing capabilities via a dedicated document library in SharePoint Online. You can also have shared OneNote notebooks with your group! You can also assign Azure AD applications to groups for single sign-on (more on that below).
(Note: for a great whitepaper on these capabilities, click here).

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To get started, you have to enable the preview functionality in your Azure AD tenant.

Then scroll down to Group Management and enable the group features

Note: I recommend doing this in your demo environment first so that you can evaluate the functionality before turning it on in production, especially since they are ‘preview’ features.

You will notice that a newly created group from the Access Panel will appear as a “Distribution Group” type.

You can edit the group properties to be able to receive email from outside the organization and you can also subscribe new members so that they are notified when new group conversations occur.