To fully appreciate LUGs' role in the GNU/Linux movement, it helps to understand what makes GNU/Linux unique.
GNU/Linux as an operating system is powerful -- but GNU/Linux as an idea about software development is even more so. GNU/Linux is a free operating system: It's licensed under the GNU General Public Licence. Thus, source code is freely available in perpetuity to anyone. It's maintained by a unstructured group of programmers world-wide, under technical direction from Linus Torvalds and other key developers. GNU/Linux as a movement has no central structure, bureaucracy, or other entity to direct its affairs. While this situation has advantages, it poses challenges for allocation of human resources, effective advocacy, public relations, user education, and training.
(This HOWTO credits the Free Software Foundation's GNU Project as the crucial motive force behind creating and furthering a free aka open source integrated system. Thus, it refers to "distributions" comprising the GNU operating system atop the Linux kernel as "GNU/Linux". Yes, the term is awkward, and FSF's request for credit isn't widely honoured; but the justice of FSF's claim is obvious.)
GNU/Linux's loose structure is unlikely to change. That's a good thing: It works precisely because people are free to come and go as they please: Free programmers are happy programmers are effective programmers.
However, this loose structure can disorient the new user: Whom does she call for support, training, or education? How does she know what GNU/Linux is suitable for?
In part, LUGs provide the answers, which is why LUGs are vital to the movement: Because your town, village, or metropolis sports no Linux Corporation "regional office", the LUG takes on many of the same roles a regional office does for a large multi-national corporation.
GNU/Linux is unique in neither having nor being burdened by central structures or bureaucracies to allocate its resources, train its users, and support its products. These jobs get done through diverse means: the Internet, consultants, VARs, support companies, colleges, and universities. However, increasingly, in many places around the globe, they are done by a LUG.
Computer user groups are not new. In fact, they were central to the personal computer's history: Microcomputers arose in large part to satisfy demand for affordable, personal access to computing resources from electronics, ham radio, and other hobbyist user groups. Giants like IBM eventually discovered the PC to be a good and profitable thing, but initial impetus came from the grassroots.
In the USA, user groups have changed -- many for the worse -- with the times. The financial woes and dissolution of the largest user group ever, the Boston Computer Society, were well-reported; but, all over the USA, most PC user groups have seen memberships decline. American user groups in their heyday produced newsletters, maintained shareware and diskette libraries, held meetings and social events, and, sometimes, even ran electronic bulletin board systems (BBSes). With the advent of the Internet, however, many services that user groups once provided migrated to things like CompuServe and the Web.
GNU/Linux's rise, however, coincided with and was intensified by the general public "discovering" the Internet. As the Internet grew more popular, so did GNU/Linux: The Internet brought new users, developers, and vendors. So, the same force that sent traditional user groups into decline propelled GNU/Linux forward, and inspired new groups concerned exclusively with it.
To give just one indication of how LUGs differ from traditional user groups: Traditional groups must closely monitor what software users redistribute at meetings. While illegal copying of restricted proprietary software certainly occurred, it was officially discouraged -- for good reason. At LUG meetings, however, that entire mindset simply does not apply: Far from being forbidden, unrestricted copying of GNU/Linux should be among a LUG's primary goals. In fact, there is anecdotal evidence of traditional user groups having difficulty adapting to GNU/Linux's ability to be lawfully copied at will.
(Caveat: A few distributions bundle GNU/Linux with proprietary software packages whose terms don't permit public redistribution. Check licence terms, if in doubt. Offers or requests to copy distribution-restricted proprietary software of any sort should be heavily discouraged anywhere in LUGs, and declared off-topic for all GNU/Linux user group on-line forums, for legal reasons.)
For the GNU/Linux movement to grow, among other requirements, LUGs must proliferate and succeed. Because of GNU/Linux's unusual nature, LUGs must provide some of the same functions a "regional office" provides for large computer corporations like IBM, Microsoft, and Sun. LUGs can and must train, support, and educate users, coordinate consultants, advocate GNU/Linux as a computing solution, and even serve as liaison to local news outlets.