Channels and groups, what is the difference?

I'm looking for an explanation of the differences between channels and groups.

I'm confused as it seems that it is possible to target banners, either using groups, or channels, am I right?

And if so, could somebody please give some short info like: what can I do with one vs. the other, and what are the pros and cons of using either of them, et.c.?

Thanks in advance