collision is what it says, it tells you when your bullet hit the bad guy or you just walked into the wall, it tells your program what object hit what, you also have something called slide collision that is almost the same but when you hit something it allows you to slide round it instead of just stopping dead, imagine how annoying Quake or HalfLife would be if every time you just brushed against a wall you stopped dead, slide collision gets round that by calculating the nearest place you could be without walking through the model you collided with, cheers.
Mentor.