Geoserver now supports the notion of having a layer-group. A layer-group is a group of layers that can be refered to by one layer name.
For example, if you put three layers (call them layer_A, layer_B, and layer_C) under the one "Layer-group" layer, then when a user makes a WMS getMap request for that group name, they will get a map of those three layers.
The layer grouping option is just a convenient way to avoid having to list many layers every time you make a WMS request. It essentially just looks at the layer group name in the WMS request, and replaces it with the layers that it represents; then the WMS request it processed.

Examples

Say I create a layer group called "Water". I then tell it that the layers in that group are "lakes, rivers, oceans" (these are existing layers called 'lakes', 'rivers', 'ocreans'). Now when I make a WMS request to "Water" I will get back those three layers: 'lakes', 'rivers', 'ocreans'. These three layers are combined into one image and that is returned to the user. I can still make individual requests to those layers, and will get the individual layers back.

Configuration

The layer-group option can be configured in the WMS configuration page of the web-admin UI.
Just navigate to Config -> WMS -> Contents
then:

1. Add a new layer group with the 'Add New Layer-Group' button at the bottom of the page.
2. Give your Layer-group a name in the "Layer-group Name" field. This is what you will use to request the group
3. List the layers, separated by commas, in the "Base-map Layers" field.
4. List the styles, separated by commas, in the "Base-map Styles" field. If you leave it blank it will use default styles
5. Hit 'Generate' to automatically create the bounds, or put in your own custom numbers.
6. Hit submit and Apply.

You can also remove an existing layer group by hitting 'remove' by its name.

Now make a WMS get map request for the "Layer-group Name", you will get a map with the layers you specified rendered with the styles you specified.