Welcome to digiKam.
I will agree that digiKam’s way of operation is quite weird compared to anything else one may be used to; it doesn’t help that what something is called in one place is called something completely different in another.
I have been using digiKam for years and I still get confused at times.
In Settings, physical locations/folders on your hard-drive are called “Collections” ; however, those “Collections” show up as “Albums” in the left pane of the main page.
In this regard, Collections and Albums are exactly the same thing and both are simply physical locations/folders contained on your hard-drives.
The peculiar thing about digiKam, as compared to most anything else, is the complete lack of a navigateable folder tree where one can scroll through and select where they wish digiKam to be; instead, any folder on one’s hard-drives must first be entered as a Collection in Settings.
Myself, I do not want every version and format of all of my many thousands of images to show up every time I hunt for something; I only want to ever see either the completely finished version, or those in the process of having information added and being keyword tagged.
So, for every folder of finished jpegs, I have a Collection/Album entered in Settings > Collections ; plus, when I am still adding metadata and information to images and keyword tagging and editing them, I enter their working folder (and thus all of it’s subfolders) as a Collection; and, when I have finished adding all the information and editing, I delete this working Collection.
Thus, when I click a keyword tag in the left pane Tags menu, I am not inundated with fifty versions of the same image, but only the single finished version — unless that image is in an unfinished working Collection, in which case it will show up.
I hope I haven’t confused the issue further.