Hi Tony,
In one line - You should not remove the users from SG-Team1. If you remove then you are adding an empty DL as member of Team1 DL
Example - We have 4 users 1&2 on Team 1 Distribution List and 3&4 on SG-Team1 Distribution list. Now, SG-Team1 is member of of Team1, if you remove 3 or 4 and a email sent to Team 1, removed person wont receive email
Inform if any details are needed
Thank you