Grouping allows you to lump together sets of emails based on the criteria you opt to use. By default, messages are grouped by when they are received, i.e. Today, Yesterday, Last Week, Last Month, and Older. Other common criteria include grouping by conversation, importance, and flags.
Sorting dictates the order that emails appear in the specified folder. The default sort order is based on date received, though there are a number of other sorting options available. In addition, you can switch between an ascending and descending sort order.
You can easily change the arrangement by selecting Arrange By: from the View menu bar...
...Or by right-clicking the inbox sorting column header, as shown below:
To customize your message arrangement:
Click on View Settings (located under the View tab in the Current View area).
This will open the Advanced View Settings window.
To change message grouping, click on the Group By... button.
Uncheck the Automatically group according to arrangement checkbox, then proceed with selecting up to four criteria to control message grouping.
To customize message sorting, click on the Sort... button.
You can select up to four criteria to sort messages.