Papermerge is mult-user system. This means that you can create multiple users. The most privileged user is called superuser or administrator. In order to use Papermerge, you need at least one user - superuser.
You can create superuser from command-line using
Only superuser can manage (i.e. create, delete) other users.
Groups are convinient way to, well, group other users. If for example you want to assign same permission on a specific folder for multiple users (e.g. For-Accounts folder, must be accessible only to users from accounting department) - then you need to create group Accountants and add all accountants to Accountants group.