A Location Item is one which holds latitude and longitude information. It is a real type of Item. These cannot hold other Locations, Equipment or Points.
A Location Group Item is what is known as a Location within the Semantic Model. It becomes most obvious when coding this in configuration files, but a Location Group Item is just a normal Group Item, with a little extra metadata to tell the Semantic Model that it is a Location that might hold more Locations, Equipment or a Point.
So, they are two different things, with unfortunately the same name! Confused enough?!
Try refreshing your browser (F5) or restarting your browser. There have been a number of reports of the UI doing something strange, but it clears up for a bit after a refresh…