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I think primarily your most top level item will always be a group.

Once you have a group established you need to add term sets.

So it seems 1 group : (many) term sets (children).

What is the difference between a group and a term set?

While on the subject, is it possible to nest term sets? From the click and point GUI management in central admin it seems that the structure is like this:

      TERM SET

and not

      TERM SET
         TERM SET
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Don't think you can nest term sets, just tried it on my end. – James Love Dec 15 '10 at 13:35
up vote 3 down vote accepted

I could be wrong but I believe it's something to do with delegation of administration and user permissions- you can apply security restrictions to groups, and each group can have "groups of terms", aka Term Sets.

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I think you're right, its definitely about permissions and not structure per say. – user879 Dec 15 '10 at 13:00
This post confirms this :… – user879 Dec 15 '10 at 13:00
Good find on that blog post! – James Love Dec 15 '10 at 13:02

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