Yes, this parameter is used for filtering shapes. You can provide an optional parameter via .OnGroup() method of ContentShape object returned from Display/Editor method of a driver.
By default it's an empty string. If you provide a groupId parameter in BuildDisplay - only the shapes with that group id specified would be taken into account when building the final output.
I found it particularly useful when needed to render the same part differently in different scenarios - returning a Combined result with ContentShape objects (each with different group specified) in it from the driver's Display method.
Remember that if you explicitly specify a group in BuildDisplay method - only the shapes with that group set will be used.