The Business Unit (BU) and the Contact Group may sound similar but they have different uses.
A Business Unit is a logical collection of Users that are used to mimic your organisational structure for streamlined delegation and approval processes. They're also used to partition contacts in an organisation to ensure contact isolation and privacy amongst your teams.
A Contact Group is a logical collection of Contacts that can be used to group contacts together making the management of guests easier as you can simply search for an entire group of contacts.
A Tag is a label attached to a contact for the purpose of identification or to give other information such as Favourite Team, Event Preferences, etc.
For clarity, here is an example.
An organisation has a main division called Sales. Sales is divided into smaller sales regions called South, North, West and East. Within each region there a sales teams who look after specific customer segments called Key Accounts, Government, Education, Commercial, etc.
To configure this within Event Hub; Sales is configured as the parent BU with the Sales Regions configured as child Business Units. The small teams under the regions can be added as a Contact Group.
A contact call Moe Szyslak is tagged with Rugby League and Broncos which are his favourite sport and team. He belongs to the Sales West region and managed by the Education Sales team.