The term "Collage" is relatively new in the art world, while the technique goes back centuries. The official definition often reads something like this:
"an artistic composition of materials and objects pasted over a surface, often with unifying lines and color." (FreeDictionary.com)
One important aspect of artistic collage is the need for good visual design while combining materials. Collages are rarely randomly put together -- the artist makes educated decisions about how the materials are chosen and how they are arranged. "Mixed Media" refers to artwork made with more than one type of material, such as a work of art made with a combination of painting, drawing and printmaking. "Collage" usually refers to paper being used as a primary medium, but other materials can also be incorporated into the artwork.
Collage can be traced back to Asia at the time of the invention of paper around 200 B.C. Because it was so valuable, every bit was used carefully and then reused again, being glued and patched together. During the Middle Ages gold leaf and gemstones were applied to panels inside cathedrals and on paintings. During the 19h century collage was a decorative art form, with people reusing valuable printed materials in new ways, decorating scrapbooks and household items using a technique called "decoupage." During this time it was rare that fine artists used collage or mixed media.
The actual term "collage" was born in the early 20th century when two important artists began incorporating the technique in their "fine art" paintings. Pablo Picasso and Georges Braque are credited with using the term to describe their Cubist still life collages. At the time, the artists were exploring abstract imagery that expressed three dimensional space in a new way. Instead of creating an image that was based on a fixed point of view, as in one created with the use of linear perspective, the Cubist pieces aimed to create images that conveyed multiple points of view of a subject, capturing a more complex reality that included time, space, and movement. This related directly to the culture of the time -- the growth of cities, the speed of industrialization, the possibilities of increased technology (especially photography and film), and the fact that printed materials were pervasive in culture all contributed to the development of Cubism. An example of a Picasso painting that features painted cubism (called "analytic") is here.
The aritsts began including unusual papers and materials into their canvases, using printed and painted papers to convey information about texture, context, and process into their compositions. Book pages, tablecloths, rope, and printed materials all found their ways into the work of these two pioneering artists. The paper was part of the work, with paint being applied to further the composition and express the entire idea. When materials are combined together, it is called "mixed media."
Collage continued to evlove into a varied art form throughout the 20th century. Artists took off in a variety of directions with different approaches, including photomontage (combining carefully cut photographs together to create a new composition.) Today, collage is a thriving art form that can be found in museums and galleries around the world. Because Picasso and Braque took the creative chance of trying something new, artists today have the freedom to use any materials that suit their expressive purpose. The line between "fine art" for museums and "craft art" for decoration has been permanently blurred. Contemporary artists still work on canvas or paper, but they also collage over existing objects such as books, cards, dolls, and even cars!