It’s not a “virtual group”, but a “virtual group user”.
My understanding is that you would create a dedicated user account in your Nextcloud (a user named “groupfolder_project1” for example). Then you would log in as this user in the web interface, create a folder, and share this folder with read/write permissions with the people who are going to use it. You would also need to configure the appropriate quota on this dedicated user account (the same quota you would have set on the group folder).
Maybe there’s something I don’t understand (maybe about the quota?), but why is it necessary to create a specific user? Any user could create this folder and share it with the right permissions. How does it help?
If you wanted a quota on the group folder originally, you can now apply that quota to the user account that shares the folder. You can also delegate administration of a folder by giving the matching user account password to whomever should have it.
If you want the shares to be centrally managed, and don’t care about quotas, you can create a single account to share all the folders. I’d recommend against doing the sharing direct from your admin account, but that’s just on general security principles.