after reading the BOL, SQL Server uses COLLATE command to identify the proper language to use. This is similar to setting the "Regional Settings" in a Windows environment (Start > > Settings > Control Panel > Regional Settings). Using the proper COLLATE command lets you set which language SQL Server uses (French, English, whatever). In that regard, it also affects sort order and comparison. If you type in an English 'A', you want it compared to all English letters, not Chinese (or other alphabet) letters. Likewise, you want it sorted by the English alphabet, not Greek or any other alphabet.
Hopefully, that's clearer than mud. :-D
-SQLBill