Windows SharePoint Services manages permissions through role definations. SPRoleDefinition and SPRoleDefinition classes provides methods to assign users to roles. Following code snippet shows how to assign the Contributor role to a custom SharePoint group programatically:

using (SPSite site = new SPSite(siteCollection))
{
  using (SPWeb subWeb = site.OpenWeb(siteName))
  {
    //You need to break role inheritence if you want to assign unique permission to subsite
    if (!subWeb.HasUniqueRoleAssignments)
      subWeb.BreakRoleInheritance(true);
    SPRoleDefinition roleDefination = parentWeb.RoleDefinitions["Contrubute"];
    SPRoleAssignment roleAssignment = new SPRoleAssignment("MyCustomerGroup");
    roleAssignment.RoleDefinitionBindings.Add(roleDefination);
    subWeb.RoleAssignments.Add(roleAssignment);
    subWeb.Update();
  }
}

Users or Groups can be assigned permission to List or Document library or list item. Following code shows assigning permission on Folder of a document library for a custom sharepoint group:

using (SPSite site = new SPSite(siteCollection))
{
  using (SPWeb web = site.OpenWeb(siteName))
  {
    SPDocumentLibrary docLib = (SPDocumentLibrary)web.Lists[libraryName];
    //Get folder
    SPListItem item = docLib.Folders[1];
    if (!item.HasUniqueRoleAssignments)
      item.BreakRoleInheritance(true);
    SPRoleAssignment roleAssignment = new SPRoleAssignment(group);
    SPRoleDefinition roleDefination = web.RoleDefinitions["Contribute"];
    roleAssignment.RoleDefinitionBindings.Add(roleDefination);
    item.RoleAssignments.Add(roleAssignment);
    item.Update();
  }
}