This extension is a must. Its features should be built-in into Firefox.

You can use it in a sidebar thanks to the "Show sidebars" button that you can add from Firefox customization. That gives you not only tab groups but also vertical tabs that have become something essential to me no matter the browser I use.

I normally create and delete groups dynamically without skimping. Every time I start doing something I create a group just for that (even if at the end it only required one tab) and delete the group afterwards.