German collar insignia during the Second World war could trace its ancestry to the Prussian military of the 17th century.  During that period, every Prussian regiment was identified by the colour of its facings (ie the lining of its jackets, which were exposed at the collar, cuffs and tails by turning back the material and buttoning it in place) as well as the lace sewn around the buttonholes.

REICHSHEER

While these collar patches had not been universal in the German armies that fought in the Great War, it was adopted in the 1920s universally by the Reichsheer, with two versions - one for dress, and the other for field use.  The collar patches were decidedly smaller, and were issued in pairs, conforming to the shape of the collar.

The Reichsheer introduced the concept of branch colours, and the collar insignia were a useful way to display this distinction (during World War One, the different colours on shoulder straps and collar patches were usually a representation of the Corps a soldier belonged to rather than the branch of service he belonged to).

WEHRMACHT - Prewar

In 1935, minor changes to this insignia included a change from silver to aluminum.  Aluminum was less expensive, brighter, and did not have the tendency to tarnish that silver did.

Also at this time, as the Reichsheer transitioned to become the Wehrmacht, collars on uniform jackets and blouses were changed to dark green. 

FIELD DRESS	Doppellitze - light grey artificial silk Kragenpatte - dark green cloth to match the new collars Mittelstreife - dark green to match the new collars Litzenspiegel - waffenfarbe
FULL DRESS	Doppellitze - aluminum Kragenpatte - as above Mittelstreife - as above Litzenspiegel - as above

	Full dress style collar patches; the lemon yellow waffenfarbe is used on the backing as well as the middle stripe and  litzenspiegel.  This example of the full dress collar patch comes from a Waffenrock dress tunic.
The BEVO quality collar litzen were produced in a shape as seen at left; they were difficult to sew directly to a uniform, and  the nice shape seen above on the machine embroidered patches was hard to duplicate when sewing by hand.
Above, early style construction, showing waffenfarbe stripes and dark green backing. At right, universal collar patches of either universal pattern, or with dark waffenfarbe matching the dark shoulder strap piping.  Note how far forward the patches are located; generally speaking, they were located about 1/2 inch from the front of the collar but were also seen sewn right at the leading edge.

In 1938, as the Wehrmacht continued to expand it was found to be inconvenient for transferring soldiers (who were issued four field blouses) to require four new sets of collar tabs.  According to LTC LH Brown, in an article in "Kettenhunde" (Vol IV No 4), old tabs were often thrown away, and the Army bore the expense not only of replacing the tabs, but of having a unit tailor sew them on for the newly transferred soldier.  For this reason, a general purpose collar tab was adopted.  This universal pattern had the waffenfarbe stripes replaced with a dark green stripe matching the middle stripe and backing. This meant also that collar patches could be mounted on the uniform in the factory, rather than by unit tailors, since all soldiers would now have the same type of tabs.  Since the backing was the same colour as the collar, the tabs were sometimes stitched directly to the collar without it.

Three different types of collar patches as worn on the field blouse; men at left and right have the dark green universal pattern unbacked; man second from left has field grey, and man second from right appears to have white waffenfarbe litzen, and also the dark green backing.

WEHRMACHT - Wartime changes

Like other items of dress used by the Wehrmacht, prewar insignia was quickly supplanted during hostilities by replacement items, usually of lesser quality.  Bearing in mind that private purchase items were permitted to be worn on walking out dress (and there were a wide variety of these, in different materials and qualities, including full dress style collar patches that could be worn on the field blouse for walking out), and older patches permitted even on the field dress, there were further changes to the collar patches. 

It must be stressed that there was not, however, an "approved pattern."  The Wehrmacht permitted whatever type of collar patch was available to be worn on uniforms.  When the new collar patches were introduced, units were not ordered to remove older patches and replace with new, rather, older patches were worn alongside newer ones until worn out.  Older stocks were used up, and German soldiers tended to hang on to original items as long as they could; earlier pattern collar patches were not only sharper looking, but could be a symbol of status as well.

When the collar of the uniform was changed back to field grey in 1940, the collar patches were changed as well, to incorporate "field grey" middle stripes and litzenspiegel. In many cases the field grey was actually a pinkish hue.  He also speculates that were there probably many of the dark green kragenpatten still on hand, and since the litzen were difficult to sew on to uniforms without the backing, some continued to be sewn to the dark green backings before being added to uniform collars.  Field grey backings were never introduced, and eventually all of these field grey collar patches came to be sewn directly to the collar without backings.

One other wartime change was the universal pattern tropical collar patch, with tan stripes on a light blue backing.