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Firstly, it has been a while since I have read the guide in the Wiki. I think the bit you are looking at is new and is pointless. Using series for collections was a common thing a while ago, but, is not needed now. The instructions are senseless as they only help with series and giving instructions on setting the series metadata at that point is a waste of time.
On the Kobo devices, you can create a collection from any column. All you have to do is to put the lookup name in the "Collections columns" field of the driver (and set the other options as desired). When you next connect, the driver will do the collection management as needed. So, if you use "tags", a collection will be created for each tag and the books on the device will be put into those collections.
Of course, some columns make more sense than others. The "tags" column can be good, but, it can mean a lot of collections. As to columns not to use, the title is the most obvious, but, author and series don't make sense as the current Kobo firmware supports these.
As an example, I currently use "#kobobookshelves,#status,#book_source". The #status is mainly reading status (such as ToRead, Reading, ToRate, Finished but has others such as "Cleaning"). These are automatically maintained using the Reading List plugin. When I add a book to a list, the value is updated. The #book_source is for wherever it was that I got the book. I set that when I add the book to calibre. #kobobookshelves is for "other" collections. This is used when I want to create a collection for some other reason. All I do is set the value in it. It, and #status, is a tag-like column. The values are comma separated lists so they can have a comma separate list of values in them.
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