In collage, artists concentrate on composition; that is, the arrangement of elements on a page. Collage does not necessarily require much technical skill, but it does require a strong sense of design. The tools of collage are relatively simple--all you need are scissors, paper and glue.
Artists cut out shapes from newspapers, magazines or photographs, arrange the shapes on a separate piece of paper or canvas, and glue them down. Sometimes artists use colored bits of paper as well.
Decoupage is very similar to collage. Decoupage involves decorating an object with colored paper or photographs, as well as paint effects, gold leaf and other touches. Many use decoupage to decorate small objects or furniture. In decoupage, the artist seals each layer of cutouts with a coat of varnish, until the "glued on" and slightly raised texture natural to collage disappears and the surface looks like an inlay. Traditional decoupage required thirty to forty layers of varnish, which the artist then sanded for a polished surface.
A famous example of decoupage is Henri Matisse's "Blue Nude II" from 1952.
Photomontage is type of composite photography where multiple photographic images are combined into a single image. Photomontages can be made in the darkroom by cutting up and re-assembling film negatives, or with collage. Since the late twentieth century, artists like Vivan Sundaram--in his 2001 series "Re-take of Amrita"--have used Photoshop to create photomontages.
The term photomontage evolved in the 1920s among a group of Berlin Dadaists. Artists like Hannah Höch and John Heartfield played with the realistic aspect of the photograph to recombine seemingly "real" images in to unreal--and often politically-loaded--compositions.
Many artists today use software to create digital collages. Digital collage is a particularly popular technique among net artists, who search the Internet for images, alter them and then post the altered images to a group blog run by fellow artists.