Why does LINQ GroupBy behave differently in memory vs database execution?

In-memory GroupBy uses hash-based grouping, while database GroupBy translates into SQL aggregation.

LINQ-to-Objects performs grouping using in-memory hash tables, iterating through each element once. In contrast, LINQ-to-Entities translates GroupBy into SQL GROUP BY clauses, which are executed by the database engine using its own aggregation algorithms. Differences arise in performance, supported aggregate functions, and grouping key complexity. Some complex groupings may not translate and fall back to client evaluation.