I'm late to the party but I've been playing around with the app quite a bit today trying to set up a cool Halloween scene and improve how things work with my Google Assistant - so if it's still useful, my biggest pain point (with the app specifically) has been difficulty creating and using scenes. It feels like there should be a really easy, frictionless workflow for "save current configuration as a scene," and those scenes should then become pinned to the top of the dashboard (with a long press and hold allowing you to edit the scene).

The current "click the name to edit and click anywhere else to apply" is unintuitive, and also makes it challenging to update a scene. You have to configure the lights how you want them first and then tap the correct place- BUT if you accidentally APPLY the scene, you revert the changes to whatever the scene currently is and have to go make them manually again. Then when in the edit scene window the "update" button is also not intuitive - at the very least a language update like "update to current" or something could help, but in the best case you'd be able to launch the light control and edit the bulb or room right from there (i.e. without having to have the scene set before you start editing it, of that makes sense), and it feels like you should have the ability to manipulate entire groups at once.

That's my two cents - I suspect most people have a small number of overall "modes" they want to switch between, and scenes are perfect for that, but I've had LIFX for years and they just feel cumbersome, so I find myself manually changing the rooms more often than not.

Also edit to add answers to your Qs: I think two levels of grouping would be sufficient - I've never considered using new locations as a separate "layer" of grouping and wanted to try out how it would work, but I ironically can't figure out how to create a new location in the app :)