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Geometric Sets are used to group various types of non-solid geometry when looking at the Specification Tree of a CATPart file.
Geometric Sets are not required when using "Hybrid mode" of parts modeling since the solid features and geometric shapes (points, lines, surfaces, etc.) can all be grouped into a Body.
Geometric Setsare required when using non-hybrid modeling; solids are grouped into a Body, and all other geometry (points, curves, planes, surfaces, etc.) are grouped in Geometric Sets.
There are two types of Sets: Geometric Set and Ordered Geometric Set. With a Ordered Geometric Set; all the geometry must be in a sequential order, with parent geometry first (higher in the tree), and children geometry after (below) in the tree. With a (non-ordered) Geometric Set; all the geometry can be in any order. (I prefer the non-ordered Geometric Sets, because I can easily reorder things without getting errors)
The application of Sets is to keep the model easy to work with by grouping geometry into one or more sets. This is especially beneficial when working with large, complex models. Sets can also have sub-sets and sub-sub-sets to further group geometry.