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Creating groups for users within AWS Identity and Access Management (IAM) is a key aspect that simplifies permission management. By establishing groups, administrators can bundle users with similar job functions or responsibilities and assign a set of permissions to that group as a whole. This approach streamlines the management process significantly, as it eliminates the need to manage permissions individually for each user.

When new users are added to the group, they automatically inherit the permissions associated with it, enabling quick adjustments if roles change within the organization. For instance, if a group needs additional permissions to carry out a project, the administrator can update the permissions at the group level, effectively propagating those changes to all users within the group. This reduces the administrative overhead and potential for error that comes with configuring each user's permissions separately.

In contrast, assigning roles to applications, limiting users to one permission, or utilizing tags for access management may provide benefits in specific scenarios, but they do not simplify the overall management of user permissions to the same extent as using groups does.