The basic idea is, say you're cleaning up the hierarchy. You select a bunch of objects, hit Ctrl-G, type the name of the group, hit enter, and move on. At some point later you decide to move that group around, so you click one of the objects, but only that object gets selected. To select the parent you hit Space and double click on the parent object to select it.
My suggestion, provide a keyboard shortcut for selecting the parent. Ideally I'd imagine just clicking on something which selects the child object, and then hit a keyboard shortcut to select the parent in the hierarchy, without having to press Space and double click.
Having just spent over an hour re-organizing my scene, this would make things so much nicer to use :)
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