How to read Unix file /etc/group

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/etc/group is a text file which defines the groups to which users belong under Linux and UNIX operating system. Under Unix / Linux multiple users can be categorized into groups. Unix file system permissions are organized into three classes, user, group, and others. The use of groups allows additional abilities to be delegated in an organized fashion, such as access to disks, printers, and other peripherals. This method, amongst others, also enables the superuser to delegate some administrative tasks to normal users.
It stores group information or defines the user groups i.e. it defines the groups to which users belong. There is one entry per line, and each line has four parts separated by a colon (:)

1. group_name: It is the name of group. If you run ls -l command, you will see this name printed in the group field.
2. Password: Generally password is not used, hence it is empty/blank. It can store encrypted password. This is useful to implement privileged groups.
3. Group ID (GID): Each user must be assigned a group ID. You can see this number in your /etc/passwd file.
4. Group List: It is a list of user names of users who are members of the group. The user names must be separated by commas.

More about a user groups
Users on Linux systems are assigned to one or more groups for following reasons:

• To share files or other resource with a small number of users
• Ease of user management
• Ease of user monitoring
• Group membership is perfect solution for large Linux (UNIX) installation.
• Group membership gives you or your user special access to files and directories or devices which are permitted to that group

How to read UNIX file /etc/passwd

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File /etc/passwd in UNIX contains one entry per line for each user (or user account) of the system.  There are seven fields separated by a colon (:) symbol:

1. Username: It is used when user logs in. It should be between 1 and 32 characters in length.
2. Password: An x character indicates that encrypted password is stored in /etc/shadow file.
3. User ID (UID): Each user must be assigned a user ID (UID). UID 0 (zero) is reserved for root and UIDs 1-99 are reserved for other predefined accounts. Further UID 100-999 are reserved by system for administrative and system accounts/groups.
4. Group ID (GID): The primary group ID (stored in /etc/group file)
5. User ID Info: The comment field. It allows you to add extra information about the users such as user's full name, phone number etc. This field use by finger command.
6. Home directory: The absolute path to the directory the user will be in when they log in. If this directory does not exists then users directory becomes /.
7. Command/shell: The absolute path of a command or shell (/bin/bash). Typically, this is a shell. Please note that it does not have to be a shell.

/etc/passwd is only used for local users only. To see list of all users, enter:
$ cat /etc/passwd
To search for a username called tom, enter:
$ grep tom /etc/passwd

/etc/passwd file permission

The permission on the /etc/passwd file should be read only to users (-rw-r--r--) and the owner must be root:
$ ls -l /etc/passwd
Output:

-rw-r--r-- 1 root root 2659 Sep 17 01:46 /etc/passwd

Your password is stored in /etc/shadow file

Your encrpted password is not stored in /etc/passwd file. It is stored in /etc/shadow file. Almost, all modern Linux / UNIX line operating systems use some sort of the shadow password suite, where /etc/passwd has asterisks (*) instead of encrypted passwords, and the encrypted passwords are in /etc/shadow which is readable by the superuser only.