Every team obviously uses different terminology for their substitution groupings, but for our discussion nickel will mean five defensive backs in the game, dime will mean six DBs and quarter will mean seven.
The majority of college teams use a standard defense that employs four defensive backs on the field. It really doesn't matter up front if you use a 3-4 alignment with three down linemen and four linebackers or a 4-3 alignment with four down linemen and three linebackers. In the figure below, the defense is aligned in a base 4-3 defense with a standard 2-deep scheme behind it in the secondary. As long as the offense has its regular personnel on the field, there is no need to substitute an extra defensive back to match up. Regular personnel for the offense refers to one tight end, two running backs and two wide receivers.
What is a nickel package?
Nickel means the defense will choose to substitute a fifth defensive back for the Will linebacker. The defense will then play with four down linemen, two linebackers and five defensive backs. The nickel will be the adjuster. He will adjust to the formation to matchup with the third wide receiver the offense has put in the game. Whether you choose to play zone or man coverage, the fifth defensive back gives you a matchup on the offenses third wide receiver. Defenses will also substitute their four best rushers on the field, if their best pass rush combination is up front.
Why use the nickel?
If the offense chooses to play with three wide receivers instead of two in their regular grouping, they force the defense to adjust a linebacker to cover down and to play out in space on the wide receiver.
If you keep the linebacker in the game, it is very difficult to play zone coverage on the third wide receiver and basically impossible to man-to-man coverage on him. By putting a nickel back in the game for the Will linebacker, you allow him to adjust whether it is zone or man-to-man.
What is the dime package?
The dime package refers to six defensive backs on the field at the same time. The defense now employs four down linemen, one linebacker and six defensive backs. It is a lot like the nickel package. The only difference is a sixth defensive back for the Sam linebacker. The nickel and dime now play the roles of the Will and Sam linebacker.
Why use the dime?
Defenses will go to a dime package if the offense uses four wide receivers and plays without a tight end. Obviously, it's a lot like the nickel. As the nickel matched up with the third wide receiver, the dime will match up with the offenses fourth wide receiver. This prevents having the Sam linebacker from having the play in space.
The quarter package (prevent)
The quarter package refers to seven defensive backs on the field at the same time. Obviously, this package is used in very long down-and-distance situations and also prevent at the end of the game. The defense will send in a seventh DB and take out one of the down linemen. The defense goes with three down linemen, one linebacker and seven defensive backs. Basically, it is the same as the dime package for all the underneath coverages and adjustments. The quarter simply plugs in to the deep part of the secondary, which allows the defense to have an extra deep defender and play 3-deep coverage. This is a maximum coverage as you have five defenders covering the underneath zones and three defenders in deep coverage. The underneath coverage plays exactly like it does in dime coverage. The tradeoff is you only have a three-man rush.
All defensive teams have a "victory" defense for the last play of the game. Basically the right and left safeties are aligned 25 yards from the line of scrimmage and the quarter at 30 yards. The important thing is not where you align them, but the techniques they use on the last play of the game. You predetermine, based on where the ball is thrown, who can leap and make a play on the ball. You also designate which defensive back is deeper than the deepest so nobody gets behind him. It is important that you have designated leapers so every defender doesn't go up and try to make a play on the football, leaving no one to tackle an offense player who could come up with the catch.
College football has become a game of matchups - much like the NFL. If you choose to play a 3-4 or a 4-3 defense with four secondary players, it is important to have a substitution package so you can match up with multiple offensive formations.
But not all college football teams play substitution defense. Some teams choose to keep their base defense on the field at all times -- even against spread formations. These teams do this because the base defense gets more practice time and more repetitions. They also feel it keeps the defense's best 11 players on the field -- there is a reason they are the starters. This is a sound philosophy, but it limits what kind of defense you can play. In this scheme, the defense must play zone coverage or all-out blitz because the linebackers can't play man-to-man on the wide receivers. Proponents of substitution defense like it because it provides excellent matchups and gives more players an opportunity to contribute in some role on your team.