a domain requires a server. servers are more expensive than desktops and
require more care and feeding to setup and maintain. generally this is not
something i would not recommend taking on without some basic training or at
least a good bit of reading. security is a big part of it today, especially
if anything is exposed to the internet. domains provide centralized user
account control, sharing of server resources, network services, centralized
software license control, centralized software installation, and lots of
other stuff.
workgroups are automatic, unless you specifically join a domain when you
install windows you are part of a default workgroup. they provide nothing
beyond grouping of computers in the network part of windows explorer. one
big limitation is that any single win nt/2k/xp computer is limited to a max
of 10 connections from other computers, to get past that you need a
server... before that you will probably be just as happy with a workgroup
unless you require some specific server functions.
win98se can use domains, as can everything since win 95. having to ask a
question like that points out that you have LOTS of reading to do before you
attempt a domain setup.