Hi Lady J... even in a small project with just 10 collaborators you can have hundreds of documents. These documents can typically be divided into functional categories... e.g. finance, project management, management presentations, engineering, marketing, support, etc. Each member of the team may need to have access to these files - not necessarilly for changing but for reference. For example, as a Marketing person I may need to put together the latest marketing snapshot. In order to do that I need access to the latest project schedule information, finance information, and support information. And of course I would want that information to be the latest available.
Having access to this information in a common location and organized logically (so I don't have to sift through hundreds of documents) is a significant help. Additionally, it helps authors so they don't have to spend time sending out repeat information. For example, when I'm done with my marketing snapshot I simply post it in the Marketing folder as the latest update. True, someone could sort through all the files in a flat file space (like what Workspace currently has) but it would be much simpler and straightforward to have a "Marketing" folder available and the person can just look there.
Yes, as you state everyone could just have their own copy of the document on their own computer. But that leads to inconsistency and invalid data. Everytime you have multiple copies of a file there is the risk that the information contained is not the latest information. Assume you have ten people with a finance file... how do you ensure that each of those ten people are working with the same information (even if they are not changing the information, they are using it to make decisions)? Does the author email out the updated file every time it is changed? How can you ensure that they read the email and update their local file? By using a shared (and organized) repository you provide a common source for updated information - both for reference and edit.
Did that help? -Norm