This example uses both keys and modes.

Every 'computer' element in my inventory has a 'vendor' by which I want to group:

1. Define the key:

   <xsl:key name="vendors" match="computer" use="vendor"/>

2. Find the unique key values:

   <xsl:apply-templates select="computer[count(.|key('vendors',vendor)[1])=1]">

3. Process the unique value:

   <xsl:template match="computer">
      <vendor>
         <xsl:apply-templates select="vendor"/>
         <!-- Now we access the full set of elements that match the key value.
              These will be copied across in a special "identity" mode. -->
         <xsl:apply-templates select="key('vendors',vendor)" mode="computer-copy"/>
      </vendor>
   </xsl:template>

Full Example: inventory.xml group-by.xsl