Grouping
similar elements helps the brain quickly decode a page layout.
Proximity, Alignment, Containment, Rhythm and Styling are all tools
that help indicate grouping.
The power of proximity
The simplest way to associate a
number of elements is to group them together.
What grouping does is make similar
things appear similar.
That way, the scanning eye can
decipher a title (for example) and immediately associate that title
with all the objects around it. By making similar things similar,
grouping makes different things appear different. "Why are the objects
in that group instead of the other group..? They must be different."
2D design uses a range of grouping
techniques, from paragraphs and margins to navigation bars and
clustered form elements.
As with other design tools, grouping
with proximity relies on contrasting forces, in this case whitespace.
If all elements are closely-spaced, proximity becomes less effective.
Simple example
Grouping problem
Grouping needs whitespace, its
opposing force, to exist. These navigation buttons are grouped so
closely together, that the buttons and labels are equidistant, which
would definitely confuse users.
Grouping in form elements
In this form, it's clear what each of
the 2 radio buttons means ('Normal' & 'Simplified'), due to the
proximity of each button with its label.
It's also obvious which field has the
error in it, because of proximity.
Compare with what happens when I mess
up the proximity.
All that has changed is the spacing
between elements, and the form is suddenly really hard to interpret.
Several groupings on a page
This example uses grouping and
whitespace very effectively to identify related elements:
Here's the same screenshot, with
groups marked on.
Top navigation works in an unusual 3x3
grid (also linked by style and alignment)
Left column shows 'other useful
links'. They are grouped because there is more white space above and
below the group than there is between the elements
The bulleted list is naturally
grouped, as lists are normally padded with white space (also benefits
from stylistic and alignment grouping)
These icons on designer 
