If you only want the first letter, $Group(<Artist>,1) and $Left(<Artist>,1) will do the same thing.
Where Group is a little more flexible is that the second parameter is how many characters will appear in each group.
So you can tweak it depending on the how many groups you want to end up with.
1 = A, B, C, D, E, F ...
2 = AB, CD, EF ...
3 = ABC, DEF ...
Numbers are always grouped as "0-9".
If it still isn't clear:
* Select a few different files from different artists
* Right-click
* Select Send To > Folder (Copy) > Copy Files to Organised Folder
* Add the $Group function to the naming template and adjust the second parameter to see how it affects the new file name in the preview list.
Bee excellent to each other...