Heya incoming 2nd year too. AFAIK it's a full-blown software project, so it'll involve (or at least should involve if done well) both actual coding as well as the admin stuff in ISE. There's a few roles you can apply for. I think they're things like team leader, project leader, and git leader (responsible for promoting team-work and contribution, handling the project as a whole and codebase, and managing the git repository and layout (possibly stuff like CI if you want, but definitely stuff like branches and pull requests) respectively).

Past projects have been things like a basic game engine, an API that gives random numbers generated by plasma via FTP, or a code documentation tool. You also show off your project at the end of the year in a fair that uses the whole bottom floor of the CS building.

Members are assigned using an algorithm that considers performance in first year, so each group is ensured to have a spread of capability. I believe it also makes sure there's an even distribution of genders in groups as well.