From Help (which should be your first port of call)
To create a group of contacts
You can create a single group name (or alias) to use when sending a message to several contacts at once. Simply create a group name and add individual contacts to the group. Then, just type the group name in the To box when you send e-mail.
In the Address Book, select the folder in which you want to create a group. Click New on the toolbar, and then click New Group.
The Properties dialog box opens. In the Group Name box, type the name of the group.
There are several ways to add people to the group:
To add a person from your Address Book list, click Select Members, and then click a name from the Address Book list.
To add a person directly to the group without adding the name to your Address Book, type the person's name and e-mail address in the lower half of the Properties dialog box, and then click Add.
To add a person to both the group and your Address Book, click New Contact and fill in the appropriate information.
To use a directory service, click Select Members, and then click Find. Select a directory service from the drop-down list at the end of the text box.
After finding and selecting an address, it is automatically added to your Address Book.
Repeat for each addition until your group is defined.
To view a list of your groups separately from the Address Book listings, in the Address Book, on the View menu, make sure that Folders and Groups is selected.
You can create multiple groups, and contacts can belong to more than one group.