Collagen is made out of mainly 3 amino acids:(hydroxy)proline, lysine, and glycine. So in theory collagen powder is giving you very high levels of those specific amino acids which would help promote collagen formation. I can’t say I’m familiar with the literature and if there is any data behind that - but thats your reason
I've tried collagen powder before, because it's very easy to take since it easily dissolves in drinks (and I think actually improves them), and I think it made my hair and nails grow faster but didn't do much else.