If a language teacher has put the words 'school, teacher, headmaster, peon' in a group, then she is following—

Semantic grouping organizes words by meaning or thematic relationship. The words 'school, teacher, headmaster, peon' are all related semantically—they belong to the semantic field of 'school/education'. They share no common phonetic feature or grammatical category (school is a place/institution, the others are persons). Hence (2) semantic grouping is correct.