Grouping APIs by tags in Spring Boot means adding the @Tag annotation to your API controllers or methods. This annotation assigns a name that documentation tools like Swagger use to group your endpoints. When the application starts, it reads these tags and organizes the API docs accordingly. Without tags, all APIs appear in one list, which can be confusing. Adding tags helps users find related APIs easily. For example, a UserController with @Tag(name = "User") will have all its endpoints grouped under 'User' in the docs. This process happens during app startup and is visible in the Swagger UI.