One problem with this question is that it seems logically inconsistent.
Let's take some starting assumption:
A government is in the business of legislating/regulating/coercing. Or deciding not to.
We are talking about a unitary country/state/province applying regulations to residents/citizens of that territory.
The democracy bit is not all that relevant. Same principles above apply to dictatorships.
Option 1 - everyone gets to do as they want.
Totally valid. This is a domain the government is not intervening in. Many supporters of democracy like the idea of small-as-possible government.
For example, everyone can generally eat as they wish (health regulations and endangered shark fins aside).
Option 2 - everyone welcomes the regulation
Countries have sides of the road on which to drive. It doesn't really matter which but there is an obvious benefit to have rules to avoid accidents (still, the right hand side is morally superior!)
No dilemma here either.
Option #3 Different groups get to do different things (this Q).
Let's jump into a contentious subject, abortion in the US.
Certainly pro-choice meant the people not wanting to have abortion could... not have them. But the pro-life counterargument is that the fetuses/unborn children did not have a choice. So, in their view, anyone aborting, in any group B, C, D... is morally repugnant.
In 2020, one group got to decide over the other. No real compromise was possible in the view of pro-life folk (one could also argue that the pro-choice crowd never countenanced term limits well accepted by European electorates).
To cite a comment:
if it's legal for some people, it's legal for all people
EU/not in EU.
Only some of the citizens would follow the rules of the EU, not all of them by choosing what they believe is right for themselves.
No, this doesn't make any sense either. The EU will either grant market access or not. Ask the Brexit crowd about it.
To invade or not to invade?
Russia's war on Ukraine seems popular with some and Putin has some approval rating. Surely, until the the partial mobilization last September, this would fit the Q? Group A joins volunteer battalions and group B sits out the war?
No, everyone gets hit with sanctions and everyone sees reduced services from military spending. So even there a government has to take a stand (fudging on mobilization is also very sub-optimal).
After decades of war on drugs, Canada legalized cannabis. Generally a logical and popular move. But what about harder drugs? Cocaine/LSD/mushrooms etc might be regulated without excessive societal issues. How about strongly addictive and dangerous substances like heroin and fentanyl? Group A can sit them out, while group B indulges. But what happens when Group A is asked to foot the medical bills? It certainly affects them and the freedom accorded to group B comes at a cost to others.
Option 4: Absence of regulation is not always neutral.
Sure, in the case of what to eat, the government can sit it out. But let's take, sorry for that old example, child porn.
Some, very liberal and democratic, Western countries had no child pornography laws on the books. That is a choice.
Until Italy decided to criminalize groping on public transport, that was also a choice, which impacted Group B - women who didn't like getting groped.
Option 5 - laws granting rights.
An example would be laws granting freedom of religion. Those are almost the opposite of active government intervention, so they're generally not infringing on the rights of any groups and aren't very contentious in a healthy society. Hardly in scope of this question (except as far as arguing that it "infringes on the rights" of groups to coerce others).
I am sure there are counter-examples.
But not enough to posit a system where you can have a government, other than anarchy, that actually governs while offering everyone their preferred choice on a wide spectrum of issues.
The exact governance system, democracy per this question, has little to with this issue, other than democracy needs checks and balances to avoid the tyranny of the majority problem.