Each user has a unique number, called a uid. Each group has a unique number, called a gid. It's the uid and gid that gets stored as owners of files, not the username or groupname.

The mapping between username and uid is in /etc/passwd, and the mapping between groupname and gid is in /etc/group (unless you've set up some other form of database for this).

When you use ls -l to list files, ls will query /etc/passwd and /etc/group to find the corresponding username and groupname for the file ownership.

When you remove a group, you just remove the mapping between groupname and gid in /etc/group, nothing happens to the files this group owned, they'll still be owned by the same gid, but since that group doesn't exist anymore, ls -l will print the gid instead of a groupname, and no one will have access to the file via its group ownership anymore.

If you create a new group and it gets assigned the same gid as the one you deleted, the files will then be owned by that group.

See also http://mywiki.wooledge.org/Permissions