A collection is a way of segregating workflows into sets in order to keep them more organized for every individual. This is totally up to the user and can be treated as having different set of workflows where each set forms a collection with some specific set of tasks. Watch out for custom collections for different domains which will soon launch on YellowAnt.
If you create a new event triggered workflow and do not select/create a collection, by default it gets added to a collection called workflow. If you add the workflow to a certain collection, it still makes no difference to the way it is executed (unlike command workflows). In event workflows, it is purely a better way to organize your workflows.
In this case, the event workflow will add to the collection "workflow" since we did not select/create any collection.
In this case, the event workflow will add to the collection "demo-collection".