Lexical Analyzer:
The lexical analyzer is the first phase of the compiler design process. Its main task is to break the source code into meaningful units called tokens. A token represents a group of characters with a collective meaning, such as a keyword, identifier, operator, or constant.

Tokens:
Tokens are the smallest units of a program that carry meaning. They can be words, numbers, operators, or punctuation marks. For example, in the statement "int x = 10;", the tokens are "int", "x", "=", and "10". Tokens are identified by the lexical analyzer and passed on to the next phase of the compiler for further processing.

Grouping Characters:
In the lexical analyzer phase, the characters of the source code are grouped into tokens based on their collective meaning. The lexical analyzer scans the source code character by character and identifies the patterns that form tokens. It uses a set of rules defined by the programming language to determine the type of each token.

Example:
Let's consider an example to understand how characters are grouped into tokens in the lexical analyzer phase. Suppose we have the following line of code in C programming language:

```
int sum = 0;
```

The lexical analyzer will break this line into the following tokens:

1. Token: "int"
- Type: Keyword
2. Token: "sum"
- Type: Identifier
3. Token: "="
- Type: Operator
4. Token: "0"
- Type: Constant
5. Token: ";"
- Type: Punctuation

Each token represents a specific type of information in the code. The lexical analyzer identifies these tokens by grouping the characters together based on the rules of the programming language.

Conclusion:
In conclusion, the grouping of characters into tokens is done in the lexical analyzer phase of the compiler design process. The lexical analyzer scans the source code and identifies the patterns that form tokens based on the language rules. These tokens are then passed on to the next phases of the compiler for further processing.