Collections are set up as synchronization points. If you are synchronizing with Dropbox, you can have multiple dropbox folders set up to sync. For example, you may have a personal folder with your notes and a shared folder that you sync notes with other people. Those two folders can both be set up and would show up as different "Collections" of notes. Same applies with Toodledo, you can actually sync with Toodledo and dropbox at the same time, they just show up as different collections.
Notebook doesn't have the ability to do nested folders, but if it did, we'd still need to do it at the notebook level (folders below collections) not at the collection level. Sorry, I got a bit off topic but I wanted to explain what the collections were about at the same time.