Normally, the cloud remains dispersed by thermal and turbulent pressures which balance gravitational attraction. When mutual gravitational attraction dominates, regions of the cloud start to condense into stars. As the gravitational contraction proceeds, interstellar clouds fragment into progressively smaller subunits, many of which continue contracting upon themselves and continue moving toward the center of the original cloud mass. The contracting cloud fragments become a cluster of stars. In fact, since the original cloud would have had some kind of rotational motion, stars condensing from it would not fall directly toward the center of the cloud, but into orbits around its center of mass.
Collisions are rare.
Good examples of star clusters are the Hercules and Puppis star clusters. Our Sun is not a member of a star cluster. Let's follow the contraction of one cloud fragment. Matter from further out in the fragment continues to fall into this central condensation for some time afterward. In the central region, pressure mounts as the contraction proceeds, generating heat and radiation.