SharePoint sites vs. Site Collections - CONFUSED!

There are some great responses, to what has always been a difficult question.  Sites vs. Site Collections will depend on the use, the volume of data and security/admin required and there is no one formula that can be applied to give you your result.

However, that being said, here are a couple of things that I look at when I am trying to design a SharePoint site structure:

1. Security - Does this site need security that is different from the rest of the content on your site, if yes consider that a site collection 

2. Administration - Are you going to be using different Admins to the rest of the site to look after content, maintain security or metadata as it is different to the rest of the site,  if yes, then consider a Site Collection

3. Large Volumes of Content - Another factor that needs to be taken into account is the volume of content that is going to be worked through the site.  As you get larger volumes of content, it requires more structure (i.e. sites), more permissions, more governance and metadata.  While Office 365 is a great system there are also limits,  so if your looking volumes of content say greater than 100gb then consider the use of a site collection over a subsite to help define and maintain your site over the long-term.

On the flip side if your using site collections to help separate and govern your site. you need to take into account your navigation, how you're going to maintain metadata or templates between each site or how search will need to be configured.  Site Collections bring a lot of advantages to larger sites, but they also need more planning to be successful.