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You've got 500-something friends, all of about 50 you really interact with. You went to school with Lucy and Henry, you've worked with Mike for years, and Joe lives just down the block. Facebook knows all of this - it just doesn't really go out of its way to show that it knows all of this. Until now.
Sometime recently, Facebook began rolling out 'Smart Lists' to select users - which, as the name implies, intelligently groups certain obvious groups of friends into pre-packaged lists. Take that, Google Plus!
So far, it looks like Facebook is automatically grouping friends into three different bunches:
People you work with People you attended school with People who live within 50 miles of you