word-forming element meaning "under, beneath; behind; from under; resulting from further division," from Latin preposition sub "under, below, beneath, at the foot of," also "close to, up to, towards;" of time, "within, during;" figuratively "subject to, in the power of;" also "a little, somewhat" (as in sub-horridus "somewhat rough"), from PIE *(s)up- (perhaps representing *ex-upo-), a variant form of the root *upo "under," also "up from under." The Latin word also was used as a prefix and in various combinations.
In Latin assimilated to following -c-, -f-, -g-, -p-, and often -r- and -m-. In Old French the prefix appears in the full Latin form only "in learned adoptions of old Latin compounds" [OED], and in popular use it was represented by sous-, sou-; as in French souvenir from Latin subvenire, souscrire (Old French souzescrire) from subscribere, etc.
The original meaning is now obscured in many words from Latin (suggest, suspect, subject, etc.). The prefix is active in Modern English, sometimes meaning "subordinate" (as in subcontractor); "inferior" (17c., as in subhuman); "smaller" (18c.); "a part or division of" (c. 1800, as in subcontinent).
group n.
1690s, originally an art criticism term, "assemblage of figures or objects forming a harmonious whole in a painting or design," from French groupe "cluster, group" (17c.), from Italian gruppo "group, knot," which probably is, with Spanish grupo, from a Germanic source, from Proto-Germanic *kruppaz "round mass, lump," part of the general group of Germanic kr- words with the sense "rounded mass" (such as crop (n.).
Extended to "any assemblage, a number of individuals related in some way" by 1736. Meaning "pop music combo" is from 1958. As it was borrowed after the Great Vowel Shift in English, the pronunciation of the -ou- follows French rather than English models.