Liquid Collector obtains liquid (such as Water) from the atmosphere of the planet. "What liquid is produced" depends on the type of planet (for example, on Sulphuric planet it produces Sulphuric Acid, while on the Crystalline planet it produces Organic Soup). For "normal" worlds (such as Garden, Forest, Eden, etc.) it will be Water.
Liquid Collector produces significantly more liquid than an otherwise more advanced Atmospheric Condenser. However, unlike the Atmospheric Condenser, Liquid Collector is not a storage. It can't accumulate the liquids inside. Instead it will immediately pour the liquid into the world (so you need background blocks behind it, or the liquid will immediately disappear). You might want to place it over a lake and/or near the Pump to automatically collect the liquid.
If there are other "air wells" (Liquid Collectors, Atmospheric Condensers or Entropic Converters) within 12 blocks, then Liquid Collector will have significantly reduced production. Scan the Liquid Collector to check if it was affected by this.
Tips
Liquid Collector is more useful for liquids that aren't Water, because Water Generator produces Water faster.
There is no production penalty for Liquid Collector being too close to Water Generator (only to other Liquid Collectors). So if you want to have a very small base, you can use both Liquid Collector and Water Generator to generate more water from the same area.
Condensation (Electronics tree).