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Group Pages and Product Pages exist to make shopping easier for your customers by helping them browse and find the product they desire quickly.
This may be an extreme example particularly if you have a small number of unique items, but I hope it drives home the point that when we categorize our products for customers it makes their shopping experience easy and enjoyable. When you make a customer's task easier, they are much more willing to buy your products.
Group Page - A page that shows all products that are grouped similarly.
In the example below, the product category is "Footwear":
Product Page - A page that shows the product details of one item.
The main difference here is that the Group Page template will display multiple products, whereas the Product Page displays the details of a single item.