When you create a group of 2-24 players, each individual kill gets more XP based on total group members. This xp is then split between everyone "in range" of the kill. (Range is defined as the radius where the two group members show as white to each other in the group interface, as opposed to being grayed out if you wander off. If it's grayed out, the xp share stops).
Therefore, if you solo a monster maybe it's worth 1,000 xp. If a 24 person group kills it (that poor, poor Skeever...what have you done?!), it's worth maybe 4,000 xp total...split 24 ways so each group member gets a tiny share. Note that it isn't a simple, direct split. It's like you get a base value of xp for the monster, then you share from a group bonus pool. The system scaling is kinda wonky, and while I've seen a ZOS chart before I can't find one right now.
The bottom line is that when you're in a two person group, each kill nets about 105% as much xp as solo kills...the base value plus group bonus adds up to a tiny bit more. In a 3/4 person group you're earning about the exact same as solo...a little less for four...but you should be able to move through monsters so much faster that your per hour xp is way higher. Any more than four in the group and the xp falls off exponentially. But again...speed.
If you want to run 2-4 person groups, go for it and your xp will be fine. If you get more friends than this together to level, don't group up and run a party chat if you want to maximize xp (although this assumes everyone can get hits in all the time)
Add that in public dungeons 2 works nice and is faster than solo, 4 would be overkill.
For Skyreach 3-4 might work better as you would clear the rooms faster, not sure if they would respawn before returning however?