The Directory is your homebase for managing your Users, Groups, Org Units, and Shared Contacts. It presents all data on these categories in an easy and intuitive way that allows you to manage your domain and the people on it.
The Users on your domain are each of the End Users and Admins that have an email address on your domain. In the Users tab you have complete control in managing them.
Users can be organized into Groups, that function similar to collaborative mailing lists. Groups are extremely customizable both in membership and in function. A Group could be set up to work as a broadcasting tool or a forum for more intimate discussion amongst its members, depending on its settings.
An Org Unit is used to organize Users by their function and access to G Suite apps. They are different from Groups, because a user may only be a member of one Org Unit, but may be a member of multiple Groups. An Org Unit can be used to manage the Sharing Permissions of its contained users. For example, all members of one Org Unit may be allowed to share documents publicly, while a different Org Unit may only be able to share documents within the domain. This can also be useful for users who need to have certain Apps disabled entirely (ex: disabling Google+ for an Org Unit full of students, but leaving it enabled for an Org Unit of teachers.)
Shared Contacts are people that reside outside of your domain, whose contact information is captured in records created for your domain.
Contacts differ from user profiles, in that a user profile represents a user in your domain (and consumes a G Suite license) while a Contact does not.
When shared amongst users on your domain, Contacts will appear in search results and as results in auto-fills, in various fields around G Suite apps. You can have complete control over which users have access to specific Contacts by utilizing tags. You can also choose to share them in your company-wide directory.