Focused Content Management
Your community is geared around empowering your users to create, share, and consume content. You can have any number of apps installed on your site which enable users to hold discussions, share media, publish articles, upload files, schedule events, etc. This is traditionally done in the "entire site" context and members hold titles and ranks within the "whole community". While there is nothing wrong with a global scope of content organization, sometimes deeper partitions are beneficial to help keep certain areas focused.
Group Collaboration adds an additional layer of infrastructure to your community that allows you to create "collaborative workspaces" where members of your community can do all of those same things under their own self managed collaborative zones. A collaboration could consist of a single member (or administrator) organizing some content around a single subject matter; or it could consist of a "team" or "social group" working on a formal project or a supporting a recreational activity. It could be a gaming clan, a study group, a development team, or a fanfare. Use cases are abundant.
Group Access Control
Entire collaborations can be as visible (or as invisible) as you like. Leaders can make content inside the collaboration selectively private based on collaborative goals. Members can self organize into roles and responsibilities inside the collaboration according to the group needs. The whole purpose is to focus content creation and interactions within the collaboration and to keep what is produced together in an organized fashion. Although collaborations can be used to allow collaborators to work in private, it is as equally useful to keep collaborative content in the public domain. The mixture you use really only depends on the purpose of your site.