I try to keep the number of books on my active devices to about 200, although there's a tendency toward upward creep. That provides me with sufficient choice for my next read; more would be worse and not better, the difficulty in seeing the trees for the forest. Even at 200 books, collections are very important to me.
However, I have most of my library loaded onto an sd card on an older device. This serves two purposes: it's a form of backup and it allows quick access to any book not on my current devices. But, collections!
I can't imagine why someone wouldn't want/need collections as their library grew, for the issues of both navigation and discovery.
That's a reason there's no one-size-fits-all reader.