You can use both group conversations in Chat and specific spaces to communicate with one or more people.
Spaces are a named area where specific people can share files, assign tasks, and stay connected in their own time. You can create a space to be threaded i.e. to allow different conversations within the same space.
Group conversations allow you to chat directly with a group e.g. you can use group conversations to have a quick discussion before or after a meeting. Group conversations cannot be spilt into different threads.
Generally speaking, spaces should be used to collaborate on long-term projects with teams or specific groups of people. Group conversations should be used for direct messages with 2 or more people.
Group conversations are listed along with 1:1 conversations under Chat in Gmail:
Spaces show under their own icon on the left-hand side of the screen: