collision domain

Think of collision domain as a section of a network (subnet or segment) that is separated by a router. A segment does not have to be a physically separate piece of cable. It is possible to have a single physical LAN with multiple logical LANs (virtual LANs..ever heard of layer 3or network layer switching?). Since a router doesn't forward broadcast packets, each segment will be confined to its own broadcast packets and collisions (remember CSMA/CD for Ethernet?), thus creating its own collision domain. Hope this answered your question.

Roger Zan, CNE, MCP

...for collision domain. Along with rzan's excellent answer above:
Collision Domain: An isolated - either phyically or virtually -section of network shared by Ethernet devices, so called because these devices' traffic can "collide", or interfere with each other.
CSMA/CD is CARRIER SENSE (the sharing devices listen, aka "Sense", the cable/medium, aka "Carrier") MULTIPLE ACCESS (here's the sharing part)/ COLLISION DETECT (The devices listen for a collision of its packets with others just sent-if one is detected, a random period of time is waited before re-transmitting.
Collisions are why Ethernet and it's variants rarely can reach much more than 40%-50%, and sometimes much less, of rated wire-speed (ie, 10/100/1000M) before saturation, dropped packets, errors, and yelling from the user community occur.
Compare a collision based protocol like Ethernet with token-passing/demand priority ones like VGAnylan, FDDI, and, you guessed it, Token-Ring. These can perform well into the 90% range without significant performance drop-off.
However, also compare price, market penetration and support, and longevity.
I use Ethernet.