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When show all grouped filter is selected, you'll see all products at your store. The first special feature of this type of filter is that a Category column is shown at the Products section. You can also see a gray box on top of all columns that says: "Drag a column header here to group by that column".
Whenever you drag any column header there (Category header grouping is shown below), products will be grouped in categories by this selection:
There's also a possibility to build a "category tree" using this filter type. Let's say you want all your products grouped by Category and each Category by different Price. Than simply drag Price header into the grey field and drop it behind Category Field. You can also set "Category" as a category with "Price" subcategory; just drop Category ahead of Price Field.
When you drag column header back it will be placed between the columns where you drop it.
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