When a tree is young, its goal is to get its head above the competition and catch as much sunlight as possible. In the forest, where trees compete for light and space, the most efficient way to do this is with an "excurrent" growth habit -- that is, a single, undivided stem and lateral branches. As it reaches its mature height, the branching habit becomes "codominant" -- that is, its stem and branches often subdivide with forks instead of true lateral branches.
But when we domesticate trees, we encourage them to make this transition much earlier in life... and closer to the ground. In fact, a standard nursery practice has been to force trees into a codominant branching habit. A fork near the tip of a branch has little effect on the tree's strength; but the lower the fork occurs, the worse the problem if it fails.
A true branch is the result of a process that starts with the growth of a bud into a twig. Normally this begins from the axillary buds found where each leaf joins the twig. The meristem (reproducing cells) at the tip of the bud divide, and the newly formed cells become a twig. The meristem just under the bark -- the vascular cambium -- continues to divide so that the twig grows in diameter, forming a branch.
At the base of this twig is a swollen area called the branch collar. In this area the wood fibers of the trunk (or parent branch) veer around the twig on each side and continue toward the trunk or the base of the tree; the "plumbing system" in the branch also turns groundward -- none turns upward or goes around the trunk or parent branch. Since growth occurs at different times in various parts of the tree, the twig and branch fibers tend to form interwoven layers, a little like the laminations in plywood. Together, they create the extra wood thickness of the branch collar, which continues to grow as the twig matures.
If the fibers in the crotch at the base of the twig knit well with those of the trunk or parent branch, a bark ridge emerges to some extent across the crotch. Also, natural fungicidal materials saturate the fibers in the base of the growing twig, forming a protection zone; this does not happen in the fibers of the trunk or parent branch. This has important implications for pruning: if you cut only the protected branch fibers outside the collar, you protect the tree from decay.