Moodle allows you to organize your students into groups. Groups can be useful for having different sets of students work on different assignments, or allowing you to communicate with or grade only certain subsets of students in courses of significant size. Additionally, creating groups will also allow you to define course sections within an umbrellaed course.
From your course page, go to the Administration Block and click Edit Settings
Scroll down to the Groups section and click it to expand it.
Change the Group Mode drop-down to either Seperate Groups or Visible Groups. In Separate Groups, each group member can only see their own group. In Visible Groups, each group member works in their own group, but can also see other groups.
Click Save Changes at the bottom of the page.
In the Administration Block, click the Users menu to expand it, and then click Groups.
Click the Create Group button.
Enter a Group Name and click Save Changes.
Select your new group in the Groups column on the left, then click the Add/Remove Users button.
Click the students you want to add from the Potential Members menu on the right and click the Add button. You may have to use the Search field below the student list to find the ones you want. When done, click the Back to Groups button.
Repeat steps 6 through 9 for each group you wish to create.