The Collimator is an optical instrument consisting of a well corrected objective lens with an illuminated reticle at its focal plane. The emerging beam is parallel (collimated beam), so that the image of the reticle is projected at infinity. The collimator is usually set up in this way known as infinity adjustment (setting). When moving the reticle out of the focal plane of the objective lens, the shape of the emerging beam will change:
 
Moving the reticle away from objective lens will result in a convergent beam. The image of the reticle is real and projected at a finite distance.
Moving the reticle toward the objective lens will result in a divergent beam. If the beam diverges, a virtual image is produced at the apparent crossing point of the beam rays. This point is also located at a finite distance. This adjustment of the collimator is known as finite distance setting.
 
The main components of a standard collimator (infinity setting) are:
 

Tube mounted objective lens

Reticle adapter

Illumination device
 
A focusing collimator (finite distance setting) is similary built, however, the reticle adapter is mounted on a draw out tube for focusing adjustment.