diff -u b/core/lib/Drupal/Core/Config/FileStorage.php b/core/lib/Drupal/Core/Config/FileStorage.php
--- b/core/lib/Drupal/Core/Config/FileStorage.php
+++ b/core/lib/Drupal/Core/Config/FileStorage.php
@@ -69,12 +69,12 @@
   protected function ensureStorage() {
     $dir = $this->getCollectionDirectory();
     $success = file_prepare_directory($dir, FILE_CREATE_DIRECTORY | FILE_MODIFY_PERMISSIONS);
-    // Only create .htaccess file in root driectory.
+    // Only create .htaccess file in root directory.
     if ($dir == $this->directory) {
       $success = $success && file_save_htaccess($this->directory, TRUE, TRUE);
     }
     if (!$success) {
-      throw new StorageException("Failed to create config directory {$dir}");
+      throw new StorageException('Failed to create config directory ' . $dir);
     }
     return $this;
   }
@@ -260,33 +260,60 @@
 
   /**
    * {@inheritdoc}
+   */
+  public function getAllCollectionNames($directory = '') {
+    $collections = $this->getAllCollectionNamesHelper($this->directory);
+    sort($collections);
+    return $collections;
+  }
+
+  /**
+   * Helper function for getAllCollectionNames().
+   *
+   * If the file storage has the following subdirectory structure:
+   *   ./another_collection/one
+   *   ./another_collection/two
+   *   ./collection/sub/one
+   *   ./collection/sub/two
+   * this function will return:
+   * @code
+   *   array(
+   *     'another_collection.one',
+   *     'another_collection.two',
+   *     'collection.sub.one',
+   *     'collection.sub.two',
+   *   );
+   * @endcode
    *
    * @param string $directory
-   *   (optional) The directory to check for sub directories. This allows this
+   *   The directory to check for sub directories. This allows this
    *   function to be used recursively to discover all the collections in the
-   *   storage. Defaults to an empty string which starts checking from the
-   *   storage's root directory.
+   *   storage.
+   *
+   * @return array
+   *   A list of collection names contained within the provided directory.
    */
-  public function getAllCollectionNames($directory = '') {
+  protected function getAllCollectionNamesHelper($directory) {
     $collections = array();
-    if (empty($directory)) {
-      $directory = $this->directory;
-    }
     foreach (new \DirectoryIterator($directory) as $fileinfo) {
       if ($fileinfo->isDir() && !$fileinfo->isDot()) {
         $collection = $fileinfo->getFilename();
-        $sub_collections = $this->getAllCollectionNames($directory . '/' . $collection);
-        if (empty($sub_collections)) {
-          $collections[] = $collection;
-        }
-        else {
+        // Discover if there are sub directories representing a dotted
+        // collection name.
+        $sub_collections = $this->getAllCollectionNamesHelper($directory . '/' . $collection);
+        if (!empty($sub_collections)) {
+          // Build up the collection name be concatenating the subdirectory
+          // names with the current directory name.
           foreach ($sub_collections as $sub_collection) {
             $collections[] = $collection . '.' . $sub_collection;
           }
         }
+        else {
+          //
+          $collections[] = $collection;
+        }
       }
     }
-    sort($collections);
     return $collections;
   }
 
diff -u b/core/lib/Drupal/Core/Config/StorageComparerInterface.php b/core/lib/Drupal/Core/Config/StorageComparerInterface.php
--- b/core/lib/Drupal/Core/Config/StorageComparerInterface.php
+++ b/core/lib/Drupal/Core/Config/StorageComparerInterface.php
@@ -15,6 +15,10 @@
   /**
    * Gets the configuration source storage.
    *
+   * @param string $collection
+   *   (optional) The storage collection to use. Defaults to the
+   *   default collection.
+   *
    * @return \Drupal\Core\Config\StorageInterface
    *   Storage object used to read configuration.
    */
@@ -23,6 +27,10 @@
   /**
    * Gets the configuration target storage.
    *
+   * @param string $collection
+   *   (optional) The storage collection to use. Defaults to the
+   *   default collection.
+   *
    * @return \Drupal\Core\Config\StorageInterface
    *   Storage object used to write configuration.
    */
diff -u b/core/lib/Drupal/Core/Config/StorageInterface.php b/core/lib/Drupal/Core/Config/StorageInterface.php
--- b/core/lib/Drupal/Core/Config/StorageInterface.php
+++ b/core/lib/Drupal/Core/Config/StorageInterface.php
@@ -168,18 +168,24 @@
    * in partitioned collections. The collection name identifies the current
    * collection used.
    *
+   * Implementations of this method must provide a new instance to avoid side
+   * effects caused by the fact that Config objects have their storage injected.
+   *
    * @param string $collection
-   *   The collection name. If not set then this is normal configuration
-   *   storage. However if set the storage needs to use it to differentiate the
-   *   collections. collections can be nested for example 'language.de'. If this
-   *   is a file system then we could create a language folder with a subfolder
-   *   named de. If this is a database table then there could be a collection
-   *   column which will store the value 'language.de'.
+   *   The collection name. Valid collection names conform to the following
+   *   regex [a-zA-Z_.]. A storage does not need to have a collection set.
+   *   However, if a collection is set, then storage should use it to store
+   *   configuration in a way that allows retrieval of configuration for a
+   *   particular collection. Collections can be nested, for example
+   *   'language.de'. If this is a file system then we could create a language
+   *   folder with a subfolder named de. If this is a database table then there
+   *   could be a collection column which will store the value 'language.de'.
+   *   Storage nested levels should be consistent. If a collection with the name
+   *   'language.de' exists then a collections with the names 'language' or
+   *   'language.en.gb' should not be used.
    *
    * @return \Drupal\Core\Config\StorageInterface
-   *   An instance of the storage class. It will be cloned from the original
-   *   class to avoid side effects caused by the fact that Config objects have
-   *   their storage injected.
+   *   An new instance of the storage backend with the collection set.
    */
   public function createCollection($collection);
 
diff -u b/core/modules/config/lib/Drupal/config/Tests/Storage/ConfigStorageTestBase.php b/core/modules/config/lib/Drupal/config/Tests/Storage/ConfigStorageTestBase.php
--- b/core/modules/config/lib/Drupal/config/Tests/Storage/ConfigStorageTestBase.php
+++ b/core/modules/config/lib/Drupal/config/Tests/Storage/ConfigStorageTestBase.php
@@ -192,7 +192,7 @@
     $this->assertIdentical($data, $this->storage->read($name));
 
     // Create configuration in a new collection.
-    $new_storage = $this->storage->createCollection('collection.new');
+    $new_storage = $this->storage->createCollection('collection.sub.new');
     $this->assertEqual(array(), $new_storage->listAll());
     $new_storage->write($name, $data);
     $this->assertIdentical($result, TRUE);
@@ -204,7 +204,7 @@
     $this->assertIdentical($new_data, $new_storage->read($name));
 
     // Create configuration in another collection.
-    $another_storage = $this->storage->createCollection('collection.another');
+    $another_storage = $this->storage->createCollection('collection.sub.another');
     $this->assertEqual(array(), $another_storage->listAll());
     $another_storage->write($name, $new_data);
     $this->assertIdentical($result, TRUE);
@@ -222,18 +222,18 @@
     $this->assertIdentical($data, $this->storage->read($name));
 
     // Check that the getAllCollectionNames() method works.
-    $this->assertIdentical(array('alternate', 'collection.another', 'collection.new'), $this->storage->getAllCollectionNames());
+    $this->assertIdentical(array('alternate', 'collection.sub.another', 'collection.sub.new'), $this->storage->getAllCollectionNames());
 
     // Check that the collections are removed when they are empty.
     $alt_storage->delete($name);
-    $this->assertIdentical(array('collection.another', 'collection.new'), $this->storage->getAllCollectionNames());
+    $this->assertIdentical(array('collection.sub.another', 'collection.sub.new'), $this->storage->getAllCollectionNames());
 
     // Check that the having an empty collection-less storage does not break
     // anything. Before deleting check that the previous delete did not affect
     // data in another collection.
     $this->assertIdentical($data, $this->storage->read($name));
     $this->storage->delete($name);
-    $this->assertIdentical(array('collection.another', 'collection.new'), $this->storage->getAllCollectionNames());
+    $this->assertIdentical(array('collection.sub.another', 'collection.sub.new'), $this->storage->getAllCollectionNames());
   }
 
   abstract protected function read($name);
diff -u b/core/tests/Drupal/Tests/Core/Config/CachedStorageTest.php b/core/tests/Drupal/Tests/Core/Config/CachedStorageTest.php
--- b/core/tests/Drupal/Tests/Core/Config/CachedStorageTest.php
+++ b/core/tests/Drupal/Tests/Core/Config/CachedStorageTest.php
@@ -6,7 +6,6 @@
 use Drupal\Core\Config\CachedStorage;
 use Drupal\Core\Cache\MemoryBackend;
 use Drupal\Core\Cache\NullBackend;
-use Drupal\Core\Cache\CacheBackendInterface;
 
 /**
  * Tests the interaction of cache and file storage in CachedStorage.