It is hardwired into our genes, so you really want all people in your society to be part of the same ingroup.
Things which destroy a common group identity e.g. immigrants who don't assimilate or cultivation of political group identities which trump national identity tear society apart. You end up with your neighbor being part of an outgroup - a recipe for hate and violence.
Some of the most brutal conflicts in history were between two sides which were, to any third-party observer, virtually identical.
No matter how small your ingroup is, the members aren't all clones of each other. They have differences in how they were raised by their parents, and in some of the things they think. Differences are not automatic deal-breakers for your ingroup. So, if one works hard enough, it should be possible to consider everyone part of your ingroup. You may want to change some people's minds on some things, but that doesn't mean you have to consider them "the other".
The same effect can be measured with Sports Fans from rival cities.
just wearing a rival teams colors can cause you to be the 'out group'.
And of course political groups.