Collusion, in the context of litigation (particularly divorce litigation) is “an improper act done, or an improper refraining from doing an act, [with another party] for a dishonest purpose.”
See Scott v Scott  P 52.
Such a purpose may include the obtaining of a divorce based on a false presentation of the facts, eg to demonstrate adultery or some other fault-based ground for divorce, at a time when the law depended on such evidence.
See also: Churchward v Churchward and Holliday (Queen’s Proctor intervening)  P 7, 18, quoting Lord Stowell in Crewe v Crewe 3 Hagg 123 at 129:
“Collusion may exist without connivance, but connivance is (generally) collusion for a particular purpose. Collusion, as applied to this subject, is an agreement between the parties for one to commit, or appear to commit, a fact of adultery, in order that the other may obtain a remedy at law as for a real injury. Real injury there is none, where there is a common agreement between the parties to effect their object by fraud in a court of justice. If such conduct were permissible, it would authorize parties to violate their marriage vow, and would encourage profligate and dissolute manners. The law, therefore, requires that there should be no co-operation for such a purpose, and does not grant a remedy where the adultery is committed with any such view.”
An order obtained by fraud or collusion may be set aside: see Edgerton v Edgerton  EWCA Civ 181;  1 WLR 2655, CA.