The Collection names are sorted alphabetically, then the 'orphaned' ebooks (those not in any collection) are left untouched.
This is why some people like to give a name to their 'Reading' collection something that would cause it to be first in the collection listing. This is especially useful if (like me) you have multiple books you are engaged in reading and don't want to go through any number of screens to get to your 'Reading' collection.
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