You have understood the functionality completely correctly. The reason for this decision to use collections instead of normal folders is not immediately obvious.
We maintain compatibility with a variety of plugins (full list on our website: https://devowl.io/wordpress-real-media-library/#compatibility), including Justified Image Grid (https://justifiedgrid.com/) and FooGallery (https://foo.gallery/). These plugins provide the user with very dynamic galleries, which can consist of images only. For this purpose, these plugins group images into collections (“image galleries folders”). As part of compatibility, we have integrated their collections feature more naturally into the folder tree of the Real Media Library, making it as easy as possible to use. We and the developers of the two plugins want to avoid confusion for users, as it is called folders and collections, depending on whether you use Justified Image Grid and FooGallery with or without the Real Media Library.
In addition, as you have already mentioned, we use the collections with our own simple Gutenberg Gallery feature to group multiple images and galleries into just folders where you can only store images, to avoid the expectation that you can show videos or PDFs within a gallery, for example. Therefore, we decided to introduce the special kind of folders called collections as a structural element.
I hope that this explanation makes the reason for the collections a little clearer 🙂