On the Display tab, in the Display Columns section each column has a Group By option that allows you to group the items. You can then decide whether to initially show items expanded or collapsed within the group using the Groups initial state list in the Grouping and Linking section.
An example would be to group by the Status column inside a Tasks list, as shown in the following figure.
If you wish to group using multiple columns, you can change the order of the grouping, using the Grouping Order section, by dragging columns into group order. The column at the top of the Grouping Order section is the first column used to group the returned items.