From TDN

A collision poly is the shape used to determine if an object has collided. For example, in TGB when you add a sprite and set it's collision detection mode to "Polygon", the default collision poly is a square surrounding the sprite. If your sprite was a square, then this is fine, but if your sprite was a more complicated shape, then the collision polygon could be edited for more realistic collisions. To edit it, click on the sprite in the level builder and click on the far left widget. The camera should zoom into the object. Left click to create a point and right click to delete a point. Click and drag the points so the lines surround the object shape. It's best to use as few a points as possible to increase performance. The shape you create must be convex. Therefore, if you clicked somewhere and a point didn't come up, chances are the shape is no longer convex. Drag points to move them into position. Once your happy with the shape of the polygon, press Enter or click on the selection tool. The camera should zoom back out. Test the collision and hopefully the objects collide more accurately.