There's an approximate performance limit of 1 write transaction per second to an entity group.
The whole group does get locked for the update. A subsequent transaction will fail and retry.
10k entities in an entity group sounds like a lot, but it really depends on your write patterns. For example, if only a few entities in the group are ever updated, it may not be a big issue. However, if random users are constantly updating random entities in the group, you'll want to split it up into more entity groups.
"performance limit of 1 write transaction per second" - does this mean that it will take ~5 seconds to complete 5 simultaneously issued transactions (on entities of the same group)?
That can happen, since there's some auto-retry in the transaction infrastructure. It's also possible that the first few transactions will succeed and the later ones might just fail (this is more likely with more traffic)
There are two types of entities per group. Entities of first type (a few thousands) change rarely (few times a week), the second type entities (a few thousands also) will change several times a day.
Does it matter if there is no actual conflict between the updates? I expect the occasions when two transactions attempt to update the same entity to be very rare.
When you put them in the same entity group, you limit the whole entity group. Essentially, if you put entities in the same entity group, they're treated as one in terms of transactions. If you want better performance, you want your entities to be in separate groups. Because of that you usually want to keep the number of entities in a group to a minimum if possible.