The below step by step tutorial will explain about how to create a Team within Project in Azure Boards (previously VSTS)

You need to be a project Admin of the site

Step 1:  Click on Project settings on the left bottom

Step 2:

Then Click on Teams —> Create a New Team

Step 3: 

Enter the name of the team, along with description and choose area path if needed and then click on Create Team

Step 4:

A new team would be created as shown