Here's a hip file where I tested with collisions, without collisions, and with collision vel. Even with my collision vel set to 0, we still get full velocity from the collisions. If I understand collisionvel correctly, it only happens when the fluid contacts the collision geometry. Since my collision geo is inside the source, thats my entire sim. We need collisions in order to have a collision vel, so how can I dampen the amount of velocity we are receiving from collisions?

Midasssilver
so how can I dampen the amount of velocity we are receiving from collisions?

you can decrease Velocity Scale on /obj/smoke_source/collisionsource1 for example
then /obj/smoke_simulation1 will behave accordingly since Static Object is using point v attribute for velocity by default

as for your /obj/smoke_simulation2 where you think you are setting custom collisionvel, you are just adding it to collisionvel computed from Static Object, so you are getting the same effect as previous if you are adding 0
to actually override the collisionvel, set operation to Copy for example, or use full workflow of sourcing both collision and collisionvel directly instead of getting both from static object and overriding collisionvel afterwards, as that's gonna cost you

that all being said, if you mess with collision velocity you are gonna have a bad time