Hi Norwayclub - Spaces Module allows for the Nesting of Groups so essentially Groups within Groups. We call them Spaces to differentiate, but other than the capability to 'nest' they have all the same features.
Some more details extracted from previous posts here;
#Spaces module is the most capable of all context-modules since it supports sub-spaces. We generally recommend it for structuring websites by some predefined pattern, like regions, schools, specialities, etc. Say, if you are creating a network for a country, you could use Spaces to generate contexts for States and Towns. Spaces can be private, public and secret.
#Groups are more generic. People have certain preconceptions about how Groups work and that makes them useful for allowing standard members create ad-hoc groups without any predefined hierarchy. Groups can not have subgroups. So, people can just add a group like "Proud Bikies" or "We all love pizza" and use it as they will. Groups can be private, public and secret.
Full thread is below;