The tree shows all items and item groups. Items and groups can be added in the tree, items can be dragged between groups, and you can double click on an item to open it in the Items page.
To add an item group either:
Right click in the white space below the tree and select "Add Root Node" from the context menu.
Right click on an item group folder and select "New Group" from the context menu
To add an item, right click on an item group and select "New Item" from the context menu