To clarify, you're working with SharePoint online, not 2016. 2016 refers to the on-prem version of SharePoint.
The word Group can refer to a couple different things:
Office 365 Group - A group of users that exists in Azure AD that also gets a team site, distribution list email address, and other features.
SharePoint Group - A group used to work with permissions within a SharePoint site collection.
SharePoint Groups in online are equivalent to SharePoint groups in SharePoint 2013, 2010, etc. To create a SP group, go to a site --> site setting --> people and groups.
But you may want to read up further on SP online first, as the old way of doing things was to create a site collection with a bunch of subsites, which is where custom SP groups really helped out. The new advice is to create a flat structure: lots of site collections without subsites. In this new model, custom SP groups aren't as helpful, as an SP Group is only available within a single site collection.