Collision is necessary for the computer to know what the player will be stopped by when going in any given direction. Simple collision is necessary for the computer to not blow up when running games. Computers, as smart as they are, do not know how to properly optimize an object, or its collision. Using a static mesh would cause issues because for higher-end games the meshes are far too dense for running through them twice each frame. As well, there do still need to be some objects that don't have collision, like hanging clothes, and some collisions don't have meshes, like invisible walls. The most challenging part about collision is the lack some kind of competent automatic re-mesher that can make a low poly approximation.