Yes, it works for items on the same track (ie. V1) or items on different track (V1 and V2). You can also group non-contiguous items, if you're so inclined. For instance, you could have Clip A, Clip B, and Clip C all on V1, and group just A and C. They could also be on multiple tracks, separated by time, as well. Kind of a nifty feature.