A Microsoft 365 Group is an Azure Active Directory object that allows you to manage the membership of a number of workloads like shared Exchange mailboxes, SharePoint, and Teams.
When you create a new team, a Microsoft 365 group is created and that group becomes the hub for that new team and other Microsoft 365 workloads.
For example, the files you find in a team channel are stored in a SharePoint site that is generated automatically and connected to your team through a Microsoft 365 group.