Peter
A couple of ways to think of it are "keywords are external, collections are internal", and "keywords describe, collections organize".
What I mean by this is that one uses keywords purely to describe what's in an image, using keywords which are meaningful to other people (or to you months or years later), and reading them would allow a complete stranger to understand what the image contains and looks like, or find it via (say) a stock library search.
Meanwhile collections are for you to organize your images however you want or need, so you might include workflow information (eg proposed family slideshow, current project) which means nothing to anyone unfamiliar with your needs. They may also have descriptions such as a collection of wedding pics which is broken down into sub-collections of brides, kids, formals, candids etc. These collections might not mean anything outside of your needs, but help you group and find pictures.
John