There actually was player collision in-game at one point, and it caused some problems. Larger characters, including spiders, bats, cows, and wolves could block off entrances of some of the NPC locations in Serbule. It wasn't uncommon to have an afk character preventing access to Jack by mistake. The removal of player collision did reduce the number of player-towers, although there is a method to gain temporary solidness if the need to construct a tower arises.