Plain English Meaning
A lens system that makes the HUD picture look like it is far away in the distance, so the pilot's eyes can stay focused outside the cockpit and still read the display at the same time.
Full Definition
Optical devices that align light rays into parallel paths so that a projected image appears to be focused at infinity rather than at the surface of the display itself. In a Head-Up Display (HUD), collimators allow the pilot to view symbology overlaid on the outside world without refocusing the eyes between the instrument image and distant objects.
Context Anchor
Seen in HUD descriptions, especially when explaining why the displayed flight information can appear over the outside scene.
Derivation
From Latin 'collimare,' a misreading of 'collineare,' meaning 'to align' or 'to make straight.' The word literally means 'to make light rays line up,' which is exactly what the device does -- it straightens diverging light into parallel rays.