A household is used to group together guests who are living together under the same roof (couples and families), or singles who you are giving a +1.
Households come in handy when you are preparing your invitations as these guests would be receiving a single invitation with 2 or more RSVPs.
Adding a completely new guest into a household
To add guests to an existing household, make sure you're on the households page. Click on the household you want to add a new guest to, and scroll down to the section that says "Guests in this household" and click on "Add guests".
Add the name of the guest you want in that household, and when you go back to that household, you'll see that the guests in that household have increased and a new guest has been added to your guest list.
Moving an existing guest into someone else's household
If you want to move an existing guest into another household, go to "All guests" and click on the name of the guest you want to move. Go to the "Household" dropdown, and select the household you want to move that guest into.
Once you've moved the guest into a different household, you'll be able to go back to your Households and delete the original household as long as there are no other guests within that household.