A site collection is made up of one top-level site and all sites below it.

A site collection is made up of one top-level site and all sites below it.

A Site Collection in SharePoint is basically a collection of SharePoint sites that share common features like Content types, Templates, Site columns, permissions, Web Parts etc.

As a SharePoint Site Collection share common features, it facilitates for better administration of our websites. It can be understood by taking a practical example. For example, in my software company, we have multiple departments (Software Development, Finance, Sales, Support etc.). All using SharePoint for different purposes like Document Sharing, Team Collaboration, Blogging and much more. For better administration, we have created a SharePoint Site Collection for each department containing all of its websites