My inner collar is the exact dimensions of the freezer opening and the outer collar hangs down around 3 sides. Advantages for me are it helps secure the collar to the freezer and give me a place to screw in a drip tray if I want.
Also, it allows you to choose a nicer piece of wood as a facing, instead of using really expensive wood for the inside, where no one sees it anyways.
This isn't mine but it demonstrates what the outer collar does on my kegerator
Just make sure your collar is big enough so you have the clearance if you want to put kegs on the compressor hump. Otherwise you'll have to build one all over again (ask me how I know