Grouping vs Linking
Both grouping and linking let you create functional or spatial relationships between objects. The difference is how the objects within each hierarchy work.
Within a group all the objects act as one. When you resize a group of objects, you are resizing all objects in the group simultaneously. This type of hierarchy is good for creating complex objects with static parts, like a tree or a large terrain.
Within a linked hierarchy objects behave differently depending on which object within the hierarchy is being transformed. Any transformation you apply to the parent object is applied to all its children. However, transformations applied to a child object do not affect the parent. This type of hierarchy is good for creating objects that have moving parts like this train engine. As you move the parent all the objects in the hierarchy move, as the child moves the parent remains unchanged.
You can control exactly which transformations are applied to a child object using the options on the Linking tab in the Object Attributes dialog.
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