Multi Reference field vs Nested Collections - What's the difference?

Design help CMS
1

Sorry if I’m being stupid. Asking someone to ELI5 this as I cannot get my head around it.

I have watched the video from Webflow and I do understand it but I don’t understand what the point in the multi reference field is then?

Can someone please explain to me the difference between using a multi reference field vs a nested collection?

EXAMPLE:

I have a PRODUCT collection.
I have an INGREDIENTS collection.

Inside the product collection item in the database is a multi-reference custom field that allows me to reference the INGREDIENTS collection and display the ingredients in each PRODUCT card I’ve created.

I don’t need to nest the INGREDIENTS collection inside the product collection because it already displays the ingredients through the multi-reference no?

Thanks!