What's a "collocate"?
Collocates are the words which occur in the neighbourhood of your search word. Collocates of letter might include post, stamp, envelope, etc. However, very common words like the will also collocate with letter.
Linkages between neighbouring words which involve grammatical items are often referred to as colligation. That rely is typically followed by a preposition in English is a colligational fact.
The point of it...
The point of all this is to work out characteristic lexical patterns by finding out which "friends" words typically hang out with. It can be hard to see overall trends in your concordance lines, especially if there are lots of them. By examining collocations in this way you can see common lexical and grammatical patterns of co-occurrence.
You may compute a concordance with or without collocates (minimal processing): without is slightly quicker and will take up less room on your hard disk. The default is to compute with collocates.
The number of collocates stored will depend on the collocation horizons.
You can re-compute collocates after editing your concordance.
Re-sort a collocate list in a variety of ways.
You can see the strength of relationship between the word and the search-word which the concordance was based on.
Collocates can be viewed after the concordance has been computed.