The bottom line is this: "groups" are for collaborative work while "sections" are for differentiated work. Think of "groups" as "teams."

I teach at a community college, but I often see K-12 students set up "sections" for their IEP students. The students in these sections don't see the other students in them, but the instructor can utilize "sections" in order to easily set up different dates or even assignments for these students.

In terms of your instruction, I imagine that you'll want to continue with "groups." If you want your students to see all 40 classmates, then enable "People" in your Course Settings. If you don't want them to see the entire roster, then disable "People" and continue using "groups" for discussions and other assignments.