The dropdown is meant for viewing the contents of specific collections, and also viewing nested collections.
You can get to it by clicking on an actual collection
so the current view is of the collection. The dropdown will then tell you what collection you are currently viewing, with an option to return to the root.
It isn't a bad idea for it to always list all collections there, but that has never ever been implemented to my knowledge...
Maybe because nesting would confuse it.
