diff --git a/.vscode/settings.json b/.vscode/settings.json
index 6776bb9..fc19b34 100644
--- a/.vscode/settings.json
+++ b/.vscode/settings.json
@@ -1,37 +1,11 @@
 {
   "chat.modeFilesLocations": {
-    "chatmodes": true
+    ".awesome-copilot/chatmodes": true
   },
   "chat.promptFilesLocations": {
-    "prompts": true
+    ".awesome-copilot/prompts": true
   },
   "chat.instructionsFilesLocations": {
-    "instructions": true
-  },
-  "files.eol": "\n",
-  "files.insertFinalNewline": true,
-  "files.trimTrailingWhitespace": true,
-  "[markdown]": {
-    "files.trimTrailingWhitespace": false,
-    "editor.formatOnSave": true
-  },
-  "editor.rulers": [
-    120
-  ],
-  "files.associations": {
-    "*.chatmode.md": "markdown",
-    "*.instructions.md": "markdown",
-    "*.prompt.md": "markdown"
-  },
-  "github.copilot.chat.agent.thinkingTool": true,
-  "github.copilot.chat.alternateGptPrompt.enabled": true,
-  "github.copilot.chat.editor.temporalContext.enabled": true,
-  "github.copilot.chat.edits.temporalContext.enabled": true,
-  "github.copilot.chat.generateTests.codeLens": true,
-  "github.copilot.chat.languageContext.fix.typescript.enabled": true,
-  "github.copilot.chat.languageContext.inline.typescript.enabled": true,
-  "github.copilot.chat.languageContext.typescript.enabled": true,
-  "github.copilot.chat.newWorkspace.useContext7": true,
-  "github.copilot.chat.notebook.enhancedNextEditSuggestions.enabled": true,
-  "github.copilot.chat.notebook.followCellExecution.enabled": true,
-}
+    ".awesome-copilot/instructions": true
+  }
+}
\ No newline at end of file
diff --git a/README.md b/README.md
index 468448a..70ea1b0 100644
--- a/README.md
+++ b/README.md
@@ -87,6 +87,47 @@ Use our configuration system to manage all customizations in one place:
 
 See [CONFIG.md](CONFIG.md) for detailed configuration documentation.
 
+#### ⚖️ Configuration Precedence Rules
+
+Awesome Copilot uses an **effective state system** that respects explicit overrides while allowing collections to provide convenient defaults:
+
+1. **Explicit Settings Override Everything**
+   ```yaml
+   collections:
+     testing-automation: true    # Enables 11 items
+   prompts:
+     playwright-generate-test: false  # Explicitly disabled, overrides collection
+   ```
+
+2. **Collections Enable Groups of Items**
+   ```yaml
+   collections:
+     frontend-web-dev: true     # Enables React, Vue, TypeScript items
+     testing-automation: true   # Enables testing tools and frameworks
+   ```
+
+3. **Undefined Items Follow Collections**
+   - Items not explicitly listed inherit from enabled collections
+   - Only explicitly set true/false values override collection settings
+   - This allows collections to work as intended while preserving explicit choices
+
+**Examples:**
+```bash
+# See effective states and why each item is enabled
+awesome-copilot list prompts
+# [✓] create-readme (explicit)
+# [✓] playwright-generate-test (collection)
+# [ ] react-component
+
+# Collection toggle shows what will change
+awesome-copilot toggle collections frontend-web-dev on
+# Delta summary:
+#   📈 8 items will be enabled:
+#     + prompts/react-component
+#     + prompts/vue-component
+#     + instructions/typescript-best-practices
+```
+
 ### 📁 Manual File Approach
 
 Browse the collections and manually copy files you want to use:
diff --git a/apply-config.js b/apply-config.js
index 675acfd..fa27c64 100755
--- a/apply-config.js
+++ b/apply-config.js
@@ -100,8 +100,28 @@ async function applyConfig(configPath = "awesome-copilot.config.yml") {
     collections: 0
   };
 
-  // Process collections first (they can enable individual items)
-  const enabledItems = new Set();
+  // Import config manager for effective state computation
+  const { computeEffectiveItemStates } = require("./config-manager");
+  
+  // Compute effective states using precedence rules
+  const effectiveStates = computeEffectiveItemStates(config);
+  
+  // Create sets of effectively enabled items for performance
+  const effectivelyEnabledSets = {
+    prompts: new Set(),
+    instructions: new Set(),
+    chatmodes: new Set()
+  };
+  
+  for (const section of ["prompts", "instructions", "chatmodes"]) {
+    for (const [itemName, state] of Object.entries(effectiveStates[section])) {
+      if (state.enabled) {
+        effectivelyEnabledSets[section].add(itemName);
+      }
+    }
+  }
+
+  // Count enabled collections for summary
   if (config.collections) {
     for (const [collectionName, enabled] of Object.entries(config.collections)) {
       if (enabled) {
@@ -109,9 +129,6 @@ async function applyConfig(configPath = "awesome-copilot.config.yml") {
         if (fs.existsSync(collectionPath)) {
           const collection = parseCollectionYaml(collectionPath);
           if (collection && collection.items) {
-            collection.items.forEach(item => {
-              enabledItems.add(item.path);
-            });
             summary.collections++;
             console.log(`✓ Enabled collection: ${collectionName} (${collection.items.length} items)`);
           }
@@ -120,70 +137,36 @@ async function applyConfig(configPath = "awesome-copilot.config.yml") {
     }
   }
 
-  // Process prompts
-  if (config.prompts) {
-    for (const [promptName, enabled] of Object.entries(config.prompts)) {
-      if (enabled) {
-        const sourcePath = path.join(rootDir, "prompts", `${promptName}.prompt.md`);
-        if (fs.existsSync(sourcePath)) {
-          const destPath = path.join(outputDir, "prompts", `${promptName}.prompt.md`);
-          copyFile(sourcePath, destPath);
-          copiedCount++;
-          summary.prompts++;
-        }
-      }
-    }
-  }
-
-  // Process instructions
-  if (config.instructions) {
-    for (const [instructionName, enabled] of Object.entries(config.instructions)) {
-      if (enabled) {
-        const sourcePath = path.join(rootDir, "instructions", `${instructionName}.instructions.md`);
-        if (fs.existsSync(sourcePath)) {
-          const destPath = path.join(outputDir, "instructions", `${instructionName}.instructions.md`);
-          copyFile(sourcePath, destPath);
-          copiedCount++;
-          summary.instructions++;
-        }
-      }
-    }
-  }
-
-  // Process chat modes
-  if (config.chatmodes) {
-    for (const [chatmodeName, enabled] of Object.entries(config.chatmodes)) {
-      if (enabled) {
-        const sourcePath = path.join(rootDir, "chatmodes", `${chatmodeName}.chatmode.md`);
-        if (fs.existsSync(sourcePath)) {
-          const destPath = path.join(outputDir, "chatmodes", `${chatmodeName}.chatmode.md`);
-          copyFile(sourcePath, destPath);
-          copiedCount++;
-          summary.chatmodes++;
-        }
-      }
-    }
-  }
-
-  // Process items from enabled collections
-  for (const itemPath of enabledItems) {
-    const sourcePath = path.join(rootDir, itemPath);
+  // Process prompts using effective states
+  for (const promptName of effectivelyEnabledSets.prompts) {
+    const sourcePath = path.join(rootDir, "prompts", `${promptName}.prompt.md`);
     if (fs.existsSync(sourcePath)) {
-      const fileName = path.basename(itemPath);
-      let destPath;
-      
-      if (fileName.endsWith('.prompt.md')) {
-        destPath = path.join(outputDir, "prompts", fileName);
-      } else if (fileName.endsWith('.chatmode.md')) {
-        destPath = path.join(outputDir, "chatmodes", fileName);
-      } else if (fileName.endsWith('.instructions.md')) {
-        destPath = path.join(outputDir, "instructions", fileName);
-      }
-      
-      if (destPath && !fs.existsSync(destPath)) {
-        copyFile(sourcePath, destPath);
-        copiedCount++;
-      }
+      const destPath = path.join(outputDir, "prompts", `${promptName}.prompt.md`);
+      copyFile(sourcePath, destPath);
+      copiedCount++;
+      summary.prompts++;
+    }
+  }
+
+  // Process instructions using effective states
+  for (const instructionName of effectivelyEnabledSets.instructions) {
+    const sourcePath = path.join(rootDir, "instructions", `${instructionName}.instructions.md`);
+    if (fs.existsSync(sourcePath)) {
+      const destPath = path.join(outputDir, "instructions", `${instructionName}.instructions.md`);
+      copyFile(sourcePath, destPath);
+      copiedCount++;
+      summary.instructions++;
+    }
+  }
+
+  // Process chat modes using effective states
+  for (const chatmodeName of effectivelyEnabledSets.chatmodes) {
+    const sourcePath = path.join(rootDir, "chatmodes", `${chatmodeName}.chatmode.md`);
+    if (fs.existsSync(sourcePath)) {
+      const destPath = path.join(outputDir, "chatmodes", `${chatmodeName}.chatmode.md`);
+      copyFile(sourcePath, destPath);
+      copiedCount++;
+      summary.chatmodes++;
     }
   }
 
diff --git a/awesome-copilot.js b/awesome-copilot.js
index a64eed5..4913c01 100755
--- a/awesome-copilot.js
+++ b/awesome-copilot.js
@@ -116,14 +116,22 @@ function handleListCommand(rawArgs) {
   const { config } = loadConfig(configPath);
   const sanitizedConfig = ensureConfigStructure(config);
 
+  // Import computeEffectiveItemStates
+  const { computeEffectiveItemStates } = require("./config-manager");
+  const effectiveStates = computeEffectiveItemStates(sanitizedConfig);
+
   console.log(`📄 Configuration: ${configPath}`);
 
   sectionsToShow.forEach(section => {
     const availableItems = getAllAvailableItems(section);
-    const enabledCount = countEnabledItems(sanitizedConfig[section]);
+    
+    // Count effectively enabled items
+    const effectivelyEnabled = Object.values(effectiveStates[section] || {})
+      .filter(state => state.enabled).length;
+    
     const { totalCharacters } = calculateSectionFootprint(section, sanitizedConfig[section]);
     const headingParts = [
-      `${SECTION_METADATA[section].label} (${enabledCount}/${availableItems.length} enabled)`
+      `${SECTION_METADATA[section].label} (${effectivelyEnabled}/${availableItems.length} enabled)`
     ];
 
     if (totalCharacters > 0 && section !== "collections") {
@@ -137,10 +145,28 @@ function handleListCommand(rawArgs) {
       return;
     }
 
-    availableItems.forEach(itemName => {
-      const isEnabled = Boolean(sanitizedConfig[section]?.[itemName]);
-      console.log(`  [${isEnabled ? "✓" : " "}] ${itemName}`);
-    });
+    // Show items with effective state and reason
+    if (section === "collections") {
+      // Collections show simple enabled/disabled
+      availableItems.forEach(itemName => {
+        const isEnabled = Boolean(sanitizedConfig[section]?.[itemName]);
+        console.log(`  [${isEnabled ? "✓" : " "}] ${itemName}`);
+      });
+    } else {
+      // Other sections show effective state with reason
+      availableItems.forEach(itemName => {
+        const effectiveState = effectiveStates[section]?.[itemName];
+        if (effectiveState) {
+          const symbol = effectiveState.enabled ? "✓" : " ";
+          const reasonText = effectiveState.enabled 
+            ? ` (${effectiveState.reason})`
+            : "";
+          console.log(`  [${symbol}] ${itemName}${reasonText}`);
+        } else {
+          console.log(`  [ ] ${itemName}`);
+        }
+      });
+    }
   });
 
   console.log("\nUse 'awesome-copilot toggle' to enable or disable specific items.");
@@ -171,7 +197,66 @@ function handleToggleCommand(rawArgs) {
   };
   const sectionState = configCopy[section];
 
-  if (itemName === "all") {
+  // Special handling for collections to show delta summary
+  if (section === "collections") {
+    if (!availableSet.has(itemName)) {
+      const suggestion = findClosestMatch(itemName, availableItems);
+      if (suggestion) {
+        throw new Error(`Unknown ${SECTION_METADATA[section].singular} '${itemName}'. Did you mean '${suggestion}'?`);
+      }
+      throw new Error(`Unknown ${SECTION_METADATA[section].singular} '${itemName}'.`);
+    }
+
+    const currentState = Boolean(sectionState[itemName]);
+    const newState = desiredState === null ? !currentState : desiredState;
+    
+    // Show delta summary for collections
+    if (currentState !== newState) {
+      const { computeEffectiveItemStates } = require("./config-manager");
+      
+      // Compute effective states before change
+      const effectiveStatesBefore = computeEffectiveItemStates(configCopy);
+      
+      // Simulate the change
+      configCopy[section][itemName] = newState;
+      const effectiveStatesAfter = computeEffectiveItemStates(configCopy);
+      
+      // Calculate delta
+      const delta = { enabled: [], disabled: [] };
+      for (const sectionName of ["prompts", "instructions", "chatmodes"]) {
+        for (const item of getAllAvailableItems(sectionName)) {
+          const beforeState = effectiveStatesBefore[sectionName]?.[item]?.enabled || false;
+          const afterState = effectiveStatesAfter[sectionName]?.[item]?.enabled || false;
+          
+          if (!beforeState && afterState) {
+            delta.enabled.push(`${sectionName}/${item}`);
+          } else if (beforeState && !afterState) {
+            delta.disabled.push(`${sectionName}/${item}`);
+          }
+        }
+      }
+      
+      console.log(`${newState ? "Enabled" : "Disabled"} collection '${itemName}'.`);
+      
+      if (delta.enabled.length > 0 || delta.disabled.length > 0) {
+        console.log("\nDelta summary:");
+        if (delta.enabled.length > 0) {
+          console.log(`  📈 ${delta.enabled.length} items will be enabled:`);
+          delta.enabled.forEach(item => console.log(`    + ${item}`));
+        }
+        if (delta.disabled.length > 0) {
+          console.log(`  📉 ${delta.disabled.length} items will be disabled:`);
+          delta.disabled.forEach(item => console.log(`    - ${item}`));
+        }
+      } else {
+        console.log("  No effective changes (items may have explicit overrides)");
+      }
+    } else {
+      console.log(`Collection '${itemName}' is already ${currentState ? "enabled" : "disabled"}.`);
+    }
+    
+    sectionState[itemName] = newState;
+  } else if (itemName === "all") {
     if (desiredState === null) {
       throw new Error("Specify 'on' or 'off' when toggling all items.");
     }
@@ -205,7 +290,7 @@ function handleToggleCommand(rawArgs) {
   const totalAvailable = availableItems.length;
   const { totalCharacters } = calculateSectionFootprint(section, sanitizedConfig[section]);
 
-  console.log(`${SECTION_METADATA[section].label}: ${enabledCount}/${totalAvailable} enabled.`);
+  console.log(`\n${SECTION_METADATA[section].label}: ${enabledCount}/${totalAvailable} enabled.`);
   if (totalCharacters > 0 && section !== "collections") {
     console.log(`Estimated ${SECTION_METADATA[section].label.toLowerCase()} context size: ${formatNumber(totalCharacters)} characters.`);
   }
diff --git a/config-manager.js b/config-manager.js
index 628837f..5ffe602 100644
--- a/config-manager.js
+++ b/config-manager.js
@@ -158,6 +158,113 @@ function getAllAvailableItems(type) {
   return getAvailableItems(path.join(__dirname, meta.dir), meta.ext);
 }
 
+/**
+ * Generate a stable hash of configuration for comparison
+ * @param {Object} config - Configuration object
+ * @returns {string} Stable hash string
+ */
+function generateConfigHash(config) {
+  const crypto = require('crypto');
+  
+  // Create a stable representation by sorting all keys recursively
+  function stableStringify(obj) {
+    if (obj === null || obj === undefined) return 'null';
+    if (typeof obj !== 'object') return JSON.stringify(obj);
+    if (Array.isArray(obj)) return '[' + obj.map(stableStringify).join(',') + ']';
+    
+    const keys = Object.keys(obj).sort();
+    const pairs = keys.map(key => `"${key}":${stableStringify(obj[key])}`);
+    return '{' + pairs.join(',') + '}';
+  }
+  
+  const stableJson = stableStringify(config);
+  return crypto.createHash('sha256').update(stableJson).digest('hex').substring(0, 16);
+}
+
+/**
+ * Compute effective item states respecting explicit overrides over collections
+ * @param {Object} config - Configuration object with sections
+ * @returns {Object} Effective states for each section with { itemName: { enabled: boolean, reason: string } }
+ */
+function computeEffectiveItemStates(config) {
+  const { parseCollectionYaml } = require("./yaml-parser");
+  
+  const effectiveStates = {
+    prompts: {},
+    instructions: {},
+    chatmodes: {}
+  };
+
+  // First, collect all items enabled by collections
+  const collectionEnabledItems = {
+    prompts: new Set(),
+    instructions: new Set(), 
+    chatmodes: new Set()
+  };
+
+  if (config.collections) {
+    for (const [collectionName, enabled] of Object.entries(config.collections)) {
+      if (enabled === true) {
+        const collectionPath = path.join(__dirname, "collections", `${collectionName}.collection.yml`);
+        if (fs.existsSync(collectionPath)) {
+          const collection = parseCollectionYaml(collectionPath);
+          if (collection && collection.items) {
+            collection.items.forEach(item => {
+              // Extract item name from path - remove directory and all extensions
+              const itemName = path.basename(item.path).replace(/\.(prompt|instructions|chatmode)\.md$/, '');
+              
+              if (item.kind === "prompt") {
+                collectionEnabledItems.prompts.add(itemName);
+              } else if (item.kind === "instruction") {
+                collectionEnabledItems.instructions.add(itemName);
+              } else if (item.kind === "chat-mode") {
+                collectionEnabledItems.chatmodes.add(itemName);
+              }
+            });
+          }
+        }
+      }
+    }
+  }
+
+  // For each section, compute effective states
+  for (const section of ["prompts", "instructions", "chatmodes"]) {
+    const sectionConfig = config[section] || {};
+    const collectionEnabled = collectionEnabledItems[section];
+    
+    // Get all available items for this section
+    const availableItems = getAllAvailableItems(section);
+    
+    for (const itemName of availableItems) {
+      const explicitValue = sectionConfig[itemName];
+      const isEnabledByCollection = collectionEnabled.has(itemName);
+      
+      // Precedence rules:
+      // 1. If explicitly set to true or false, use that value
+      // 2. If undefined and enabled by collection, use true
+      // 3. Otherwise, use false
+      
+      let enabled = false;
+      let reason = "disabled";
+      
+      if (explicitValue === true) {
+        enabled = true;
+        reason = "explicit";
+      } else if (explicitValue === false) {
+        enabled = false;
+        reason = "explicit";
+      } else if (explicitValue === undefined && isEnabledByCollection) {
+        enabled = true;
+        reason = "collection";
+      }
+      
+      effectiveStates[section][itemName] = { enabled, reason };
+    }
+  }
+
+  return effectiveStates;
+}
+
 module.exports = {
   DEFAULT_CONFIG_PATH,
   CONFIG_SECTIONS,
@@ -168,5 +275,7 @@ module.exports = {
   ensureConfigStructure,
   sortObjectKeys,
   countEnabledItems,
-  getAllAvailableItems
+  getAllAvailableItems,
+  computeEffectiveItemStates,
+  generateConfigHash
 };
diff --git a/generate-config.js b/generate-config.js
index 7ebfbaa..eef66d3 100755
--- a/generate-config.js
+++ b/generate-config.js
@@ -19,7 +19,7 @@ function generateConfig(outputPath = "awesome-copilot.config.yml") {
   const config = {
     version: "1.0",
     project: {
-      name: "My Project",
+      name: "My Project", 
       description: "A project using awesome-copilot customizations",
       output_directory: ".awesome-copilot"
     },
@@ -29,23 +29,16 @@ function generateConfig(outputPath = "awesome-copilot.config.yml") {
     collections: {}
   };
 
-  // Populate with all items disabled by default (user can enable what they want)
-  prompts.forEach(item => {
-    config.prompts[item] = false;
-  });
-
-  instructions.forEach(item => {
-    config.instructions[item] = false;
-  });
-
-  chatmodes.forEach(item => {
-    config.chatmodes[item] = false;
-  });
-
+  // Only populate collections with defaults (set to false)
+  // Individual items are left undefined to allow collection precedence
   collections.forEach(item => {
     config.collections[item] = false;
   });
 
+  // Note: prompts, instructions, and chatmodes are left empty
+  // Users can explicitly enable items they want, or enable collections
+  // to get groups of items. Undefined items respect collection settings.
+
   const yamlContent = objectToYaml(config);
   const fullContent = generateConfigHeader() + yamlContent;
 
@@ -95,11 +88,15 @@ function generateConfigHeader(date = new Date()) {
   return `# Awesome Copilot Configuration File
 # Generated on ${date.toISOString()}
 #
-# This file allows you to enable/disable specific prompts, instructions,
-# chat modes, and collections for your project.
+# This file uses effective state precedence:
+# 1. Explicit item settings (true/false) override everything
+# 2. Items not listed inherit from enabled collections
+# 3. Otherwise items are disabled
 #
-# Set items to 'true' to include them in your project
-# Set items to 'false' to exclude them
+# To use:
+# - Enable collections for curated sets of related items
+# - Explicitly set individual items to true/false to override collections
+# - Items not mentioned will follow collection settings
 #
 # After configuring, run: awesome-copilot apply
 #
diff --git a/test-all.js b/test-all.js
new file mode 100644
index 0000000..55eac5f
--- /dev/null
+++ b/test-all.js
@@ -0,0 +1,103 @@
+#!/usr/bin/env node
+
+/**
+ * Comprehensive test suite for all awesome-copilot functionality
+ */
+
+const { runTests: runUnitTests } = require('./test-effective-states');
+const { runTests: runIntegrationTests } = require('./test-integration');
+const { runTests: runCliTests } = require('./test-cli');
+const { runTests: runApplyTests } = require('./test-apply-effective');
+
+async function runAllTests() {
+  console.log('🧪 Running Awesome Copilot Comprehensive Test Suite\n');
+  console.log('=' * 60);
+  
+  const results = {
+    unit: false,
+    integration: false,
+    cli: false,
+    apply: false
+  };
+
+  try {
+    console.log('\n📊 Unit Tests (Effective State Computation)');
+    console.log('-' * 45);
+    results.unit = await runUnitTests();
+  } catch (error) {
+    console.error('Unit tests failed with error:', error.message);
+  }
+
+  try {
+    console.log('\n🔄 Integration Tests (Toggle+Apply Idempotency)');
+    console.log('-' * 48);
+    results.integration = await runIntegrationTests();
+  } catch (error) {
+    console.error('Integration tests failed with error:', error.message);
+  }
+
+  try {
+    console.log('\n⌨️  CLI Tests (List and Toggle Commands)');
+    console.log('-' * 40);
+    results.cli = await runCliTests();
+  } catch (error) {
+    console.error('CLI tests failed with error:', error.message);
+  }
+
+  try {
+    console.log('\n🎯 Apply Tests (Effective States in Apply)');
+    console.log('-' * 42);
+    results.apply = await runApplyTests();
+  } catch (error) {
+    console.error('Apply tests failed with error:', error.message);
+  }
+
+  // Summary
+  console.log('\n' + '=' * 60);
+  console.log('📋 Test Suite Summary');
+  console.log('=' * 60);
+  
+  const testTypes = [
+    { name: 'Unit Tests', result: results.unit, emoji: '📊' },
+    { name: 'Integration Tests', result: results.integration, emoji: '🔄' },
+    { name: 'CLI Tests', result: results.cli, emoji: '⌨️' },
+    { name: 'Apply Tests', result: results.apply, emoji: '🎯' }
+  ];
+
+  testTypes.forEach(test => {
+    const status = test.result ? '✅ PASS' : '❌ FAIL';
+    console.log(`${test.emoji} ${test.name.padEnd(20)} ${status}`);
+  });
+
+  const passedCount = Object.values(results).filter(Boolean).length;
+  const totalCount = Object.keys(results).length;
+
+  console.log('\n' + '-' * 60);
+  console.log(`Overall Result: ${passedCount}/${totalCount} test suites passed`);
+  
+  if (passedCount === totalCount) {
+    console.log('🎉 All test suites passed! Implementation is complete.');
+    console.log('\n✨ Features implemented:');
+    console.log('  • Effective state precedence (explicit > collection > disabled)');
+    console.log('  • Non-destructive collection toggles with delta summaries');
+    console.log('  • Enhanced CLI with reason display (explicit/collection)');
+    console.log('  • Performance improvements with Set-based lookups');
+    console.log('  • Comprehensive configuration handling');
+    console.log('  • Stable config hashing and idempotent operations');
+    return true;
+  } else {
+    console.log('💥 Some test suites failed. Check individual test output above.');
+    return false;
+  }
+}
+
+if (require.main === module) {
+  runAllTests().then(success => {
+    process.exit(success ? 0 : 1);
+  }).catch(error => {
+    console.error('Test suite runner error:', error);
+    process.exit(1);
+  });
+}
+
+module.exports = { runAllTests };
\ No newline at end of file
diff --git a/test-apply-effective.js b/test-apply-effective.js
new file mode 100644
index 0000000..c4aa936
--- /dev/null
+++ b/test-apply-effective.js
@@ -0,0 +1,227 @@
+#!/usr/bin/env node
+
+/**
+ * Test to verify that apply operations always use effective states
+ */
+
+const fs = require('fs');
+const { exec } = require('child_process');
+const { promisify } = require('util');
+const path = require('path');
+
+const execAsync = promisify(exec);
+
+// Change to project directory for tests
+process.chdir(__dirname);
+
+const TEST_CONFIG = 'test-apply-effective.yml';
+const TEST_OUTPUT_DIR = '.test-apply-effective';
+
+function assert(condition, message) {
+  if (!condition) {
+    throw new Error(`Assertion failed: ${message}`);
+  }
+}
+
+function cleanup() {
+  if (fs.existsSync(TEST_CONFIG)) fs.unlinkSync(TEST_CONFIG);
+  if (fs.existsSync(TEST_OUTPUT_DIR)) {
+    fs.rmSync(TEST_OUTPUT_DIR, { recursive: true, force: true });
+  }
+}
+
+async function runCommand(command) {
+  try {
+    const { stdout, stderr } = await execAsync(command);
+    return { success: true, stdout, stderr };
+  } catch (error) {
+    return { success: false, stdout: error.stdout, stderr: error.stderr, error };
+  }
+}
+
+function getFilesList(dir) {
+  if (!fs.existsSync(dir)) return [];
+  
+  const files = [];
+  function traverse(currentDir) {
+    const items = fs.readdirSync(currentDir);
+    for (const item of items) {
+      const fullPath = path.join(currentDir, item);
+      if (fs.statSync(fullPath).isDirectory()) {
+        traverse(fullPath);
+      } else {
+        files.push(path.basename(fullPath));
+      }
+    }
+  }
+  traverse(dir);
+  return files.sort();
+}
+
+function setTestOutputDir(configFile) {
+  let configContent = fs.readFileSync(configFile, 'utf8');
+  configContent = configContent.replace('output_directory: ".awesome-copilot"', `output_directory: "${TEST_OUTPUT_DIR}"`);
+  fs.writeFileSync(configFile, configContent);
+}
+
+async function runTests() {
+  console.log('Testing that apply operations use effective states...\n');
+  
+  let passedTests = 0;
+  let totalTests = 0;
+
+  async function test(name, testFn) {
+    totalTests++;
+    cleanup(); // Clean up before each test
+    
+    try {
+      await testFn();
+      console.log(`✅ ${name}`);
+      passedTests++;
+    } catch (error) {
+      console.log(`❌ ${name}: ${error.message}`);
+    }
+  }
+
+  // Test 1: Apply respects explicit false overrides
+  await test("Apply respects explicit false overrides", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    
+    // Enable collection
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    // Explicitly disable one item from the collection
+    await runCommand(`node awesome-copilot.js toggle prompts playwright-generate-test off --config ${TEST_CONFIG}`);
+    
+    // Apply
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    
+    const files = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Should have files from collection but NOT the explicitly disabled one
+    assert(files.includes('csharp-nunit.prompt.md'), 'Should include collection items');
+    assert(!files.includes('playwright-generate-test.prompt.md'), 'Should NOT include explicitly disabled items');
+  });
+
+  // Test 2: Apply includes collection items that are undefined
+  await test("Apply includes collection items that are undefined", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    
+    // Enable collection (items remain undefined - no explicit settings)
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    // Apply
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    
+    const files = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Should include all collection items since none are explicitly overridden
+    assert(files.includes('playwright-generate-test.prompt.md'), 'Should include undefined collection items');
+    assert(files.includes('csharp-nunit.prompt.md'), 'Should include all collection items');
+    assert(files.includes('tdd-red.chatmode.md'), 'Should include collection chatmodes');
+  });
+
+  // Test 3: Apply respects explicit true overrides over disabled collections
+  await test("Apply respects explicit true overrides over disabled collections", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    
+    // Collection remains disabled, but explicitly enable one item
+    await runCommand(`node awesome-copilot.js toggle prompts playwright-generate-test on --config ${TEST_CONFIG}`);
+    
+    // Apply
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    
+    const files = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Should only have the explicitly enabled item
+    assert(files.includes('playwright-generate-test.prompt.md'), 'Should include explicitly enabled items');
+    assert(!files.includes('csharp-nunit.prompt.md'), 'Should NOT include collection items when collection disabled');
+    assert(files.length === 1, 'Should only have one file');
+  });
+
+  // Test 4: Multiple collections work together through effective states
+  await test("Multiple collections work together through effective states", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    
+    // Enable multiple collections
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle collections frontend-web-dev on --config ${TEST_CONFIG}`);
+    
+    // Apply
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    
+    const files = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Should have items from both collections
+    assert(files.length > 11, 'Should have items from multiple collections'); // testing-automation has 11 items
+    assert(files.includes('playwright-generate-test.prompt.md'), 'Should include testing items');
+  });
+
+  // Test 5: Apply output matches effective state computation
+  await test("Apply output matches effective state computation", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    
+    // Complex scenario: collection + explicit override + individual enable
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle prompts playwright-generate-test off --config ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle prompts create-readme on --config ${TEST_CONFIG}`);
+    
+    // Get list of what should be enabled according to CLI (only individual items, not collections)
+    const listResult = await runCommand(`node awesome-copilot.js list prompts --config ${TEST_CONFIG}`);
+    const enabledPrompts = (listResult.stdout.match(/\[✓\] (\S+)/g) || []).map(m => m.replace('[✓] ', '').split(' ')[0]);
+    
+    const instructionsResult = await runCommand(`node awesome-copilot.js list instructions --config ${TEST_CONFIG}`);
+    const enabledInstructions = (instructionsResult.stdout.match(/\[✓\] (\S+)/g) || []).map(m => m.replace('[✓] ', '').split(' ')[0]);
+    
+    const chatmodesResult = await runCommand(`node awesome-copilot.js list chatmodes --config ${TEST_CONFIG}`);
+    const enabledChatmodes = (chatmodesResult.stdout.match(/\[✓\] (\S+)/g) || []).map(m => m.replace('[✓] ', '').split(' ')[0]);
+    
+    const allEnabledItems = [...enabledPrompts, ...enabledInstructions, ...enabledChatmodes];
+    
+    // Apply and get actual files
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const actualFiles = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Extract base names for comparison
+    const actualBaseNames = actualFiles.map(f => f.replace(/\.(prompt|instructions|chatmode)\.md$/, ''));
+    
+    // Every enabled item in list should have a corresponding file
+    allEnabledItems.forEach(item => {
+      assert(actualBaseNames.includes(item), `Item ${item} shown as enabled should have corresponding file`);
+    });
+    
+    // Every file should correspond to an enabled item
+    actualBaseNames.forEach(fileName => {
+      assert(allEnabledItems.includes(fileName), `File ${fileName} should correspond to an enabled item`);
+    });
+  });
+
+  console.log(`\nEffective States Apply Test Results: ${passedTests}/${totalTests} passed`);
+  
+  cleanup(); // Final cleanup
+  
+  if (passedTests === totalTests) {
+    console.log('🎉 All effective states apply tests passed!');
+    return true;
+  } else {
+    console.log('💥 Some effective states apply tests failed!');
+    return false;
+  }
+}
+
+if (require.main === module) {
+  runTests().then(success => {
+    process.exit(success ? 0 : 1);
+  }).catch(error => {
+    console.error('Test runner error:', error);
+    cleanup();
+    process.exit(1);
+  });
+}
+
+module.exports = { runTests };
\ No newline at end of file
diff --git a/test-cli.js b/test-cli.js
new file mode 100644
index 0000000..5c1aa69
--- /dev/null
+++ b/test-cli.js
@@ -0,0 +1,154 @@
+#!/usr/bin/env node
+
+/**
+ * CLI tests for list and toggle commands
+ */
+
+const fs = require('fs');
+const { exec } = require('child_process');
+const { promisify } = require('util');
+
+const execAsync = promisify(exec);
+
+// Change to project directory for tests
+process.chdir(__dirname);
+
+const TEST_CONFIG = 'test-cli.yml';
+
+function assert(condition, message) {
+  if (!condition) {
+    throw new Error(`Assertion failed: ${message}`);
+  }
+}
+
+function cleanup() {
+  if (fs.existsSync(TEST_CONFIG)) fs.unlinkSync(TEST_CONFIG);
+}
+
+async function runCommand(command) {
+  try {
+    const { stdout, stderr } = await execAsync(command);
+    return { success: true, stdout, stderr };
+  } catch (error) {
+    return { success: false, stdout: error.stdout, stderr: error.stderr, error };
+  }
+}
+
+async function runTests() {
+  console.log('Running CLI tests for list and toggle commands...\n');
+  
+  let passedTests = 0;
+  let totalTests = 0;
+
+  async function test(name, testFn) {
+    totalTests++;
+    cleanup(); // Clean up before each test
+    
+    try {
+      await testFn();
+      console.log(`✅ ${name}`);
+      passedTests++;
+    } catch (error) {
+      console.log(`❌ ${name}: ${error.message}`);
+    }
+  }
+
+  // Test 1: List command shows sections correctly
+  await test("List command shows sections correctly", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    
+    const result = await runCommand(`node awesome-copilot.js list --config ${TEST_CONFIG}`);
+    assert(result.success, 'List command should succeed');
+    assert(result.stdout.includes('Prompts'), 'Should show Prompts section');
+    assert(result.stdout.includes('Instructions'), 'Should show Instructions section');
+    assert(result.stdout.includes('Chat Modes'), 'Should show Chat Modes section');
+    assert(result.stdout.includes('Collections'), 'Should show Collections section');
+  });
+
+  // Test 2: List specific section works
+  await test("List specific section works", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    
+    const result = await runCommand(`node awesome-copilot.js list prompts --config ${TEST_CONFIG}`);
+    assert(result.success, 'List prompts should succeed');
+    assert(result.stdout.includes('Prompts'), 'Should show Prompts heading');
+    assert(!result.stdout.includes('Instructions'), 'Should not show other sections');
+  });
+
+  // Test 3: Toggle collection shows delta summary
+  await test("Toggle collection shows delta summary", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    
+    const result = await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    assert(result.success, 'Toggle should succeed');
+    assert(result.stdout.includes('Delta summary'), 'Should show delta summary');
+    assert(result.stdout.includes('items will be enabled'), 'Should show enabled items count');
+  });
+
+  // Test 4: List shows effective states after collection toggle
+  await test("List shows effective states after collection toggle", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    const result = await runCommand(`node awesome-copilot.js list prompts --config ${TEST_CONFIG}`);
+    assert(result.success, 'List should succeed');
+    assert(result.stdout.includes('(collection)'), 'Should show collection reason');
+    assert(result.stdout.includes('[✓]'), 'Should show enabled items');
+  });
+
+  // Test 5: Toggle individual item shows explicit override
+  await test("Toggle individual item shows explicit override", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    const result = await runCommand(`node awesome-copilot.js toggle prompts playwright-generate-test off --config ${TEST_CONFIG}`);
+    assert(result.success, 'Individual toggle should succeed');
+    
+    const listResult = await runCommand(`node awesome-copilot.js list prompts --config ${TEST_CONFIG}`);
+    assert(listResult.stdout.includes('playwright-generate-test') && !listResult.stdout.includes('playwright-generate-test ('), 
+           'Explicitly disabled item should not show reason');
+  });
+
+  // Test 6: Error handling for invalid commands
+  await test("Error handling for invalid commands", async () => {
+    const result1 = await runCommand(`node awesome-copilot.js toggle --config ${TEST_CONFIG}`);
+    assert(!result1.success, 'Should fail with insufficient arguments');
+
+    const result2 = await runCommand(`node awesome-copilot.js toggle prompts nonexistent on --config ${TEST_CONFIG}`);
+    assert(!result2.success, 'Should fail with nonexistent item');
+  });
+
+  // Test 7: Collection toggle idempotency
+  await test("Collection toggle idempotency", async () => {
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    const result = await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    assert(result.success, 'Should succeed');
+    assert(result.stdout.includes('already enabled'), 'Should indicate no change needed');
+  });
+
+  console.log(`\nCLI Test Results: ${passedTests}/${totalTests} passed`);
+  
+  cleanup(); // Final cleanup
+  
+  if (passedTests === totalTests) {
+    console.log('🎉 All CLI tests passed!');
+    return true;
+  } else {
+    console.log('💥 Some CLI tests failed!');
+    return false;
+  }
+}
+
+if (require.main === module) {
+  runTests().then(success => {
+    process.exit(success ? 0 : 1);
+  }).catch(error => {
+    console.error('CLI test runner error:', error);
+    cleanup();
+    process.exit(1);
+  });
+}
+
+module.exports = { runTests };
\ No newline at end of file
diff --git a/test-effective-config.yml b/test-effective-config.yml
new file mode 100644
index 0000000..5bed12b
--- /dev/null
+++ b/test-effective-config.yml
@@ -0,0 +1,17 @@
+# Awesome Copilot Configuration File
+# Manual test for effective state computation
+#
+# Testing precedence rules with undefined values
+
+version: "1.0"
+project:
+  name: "Test Project"
+  description: "Testing effective state precedence"
+  output_directory: ".awesome-copilot"
+collections:
+  testing-automation: false
+prompts:
+  ai-prompt-engineering-safety-review: false
+  playwright-generate-test: true
+instructions:
+chatmodes:
diff --git a/test-effective-states.js b/test-effective-states.js
new file mode 100644
index 0000000..5139061
--- /dev/null
+++ b/test-effective-states.js
@@ -0,0 +1,183 @@
+#!/usr/bin/env node
+
+/**
+ * Unit tests for computeEffectiveItemStates function
+ */
+
+const path = require('path');
+const { computeEffectiveItemStates } = require('./config-manager');
+
+// Change to project directory for tests
+process.chdir(__dirname);
+
+function assert(condition, message) {
+  if (!condition) {
+    throw new Error(`Assertion failed: ${message}`);
+  }
+}
+
+function runTests() {
+  console.log('Running unit tests for computeEffectiveItemStates...\n');
+  
+  let passedTests = 0;
+  let totalTests = 0;
+
+  function test(name, testFn) {
+    totalTests++;
+    try {
+      testFn();
+      console.log(`✅ ${name}`);
+      passedTests++;
+    } catch (error) {
+      console.log(`❌ ${name}: ${error.message}`);
+    }
+  }
+
+  // Test 1: Empty config returns all disabled
+  test("Empty config returns all disabled", () => {
+    const config = {};
+    const result = computeEffectiveItemStates(config);
+    
+    assert(typeof result === 'object', 'Should return object');
+    assert('prompts' in result, 'Should have prompts section');
+    assert('instructions' in result, 'Should have instructions section');
+    assert('chatmodes' in result, 'Should have chatmodes section');
+    
+    // Check a few known items are disabled
+    const playwrightPrompt = result.prompts['playwright-generate-test'];
+    assert(playwrightPrompt && !playwrightPrompt.enabled && playwrightPrompt.reason === 'disabled', 
+           'Playwright prompt should be disabled');
+  });
+
+  // Test 2: Explicit true overrides everything
+  test("Explicit true overrides everything", () => {
+    const config = {
+      prompts: {
+        'playwright-generate-test': true
+      },
+      collections: {}
+    };
+    const result = computeEffectiveItemStates(config);
+    
+    const item = result.prompts['playwright-generate-test'];
+    assert(item && item.enabled && item.reason === 'explicit', 
+           'Explicitly enabled item should show as explicit');
+  });
+
+  // Test 3: Explicit false overrides collections
+  test("Explicit false overrides collections", () => {
+    const config = {
+      prompts: {
+        'playwright-generate-test': false
+      },
+      collections: {
+        'testing-automation': true
+      }
+    };
+    const result = computeEffectiveItemStates(config);
+    
+    const item = result.prompts['playwright-generate-test'];
+    assert(item && !item.enabled && item.reason === 'explicit', 
+           'Explicitly disabled item should override collection');
+  });
+
+  // Test 4: Collection enables items
+  test("Collection enables items", () => {
+    const config = {
+      collections: {
+        'testing-automation': true
+      }
+    };
+    const result = computeEffectiveItemStates(config);
+    
+    // These should be enabled by collection
+    const items = [
+      'playwright-generate-test',
+      'csharp-nunit', 
+      'playwright-explore-website'
+    ];
+    
+    items.forEach(itemName => {
+      const item = result.prompts[itemName];
+      assert(item && item.enabled && item.reason === 'collection', 
+             `${itemName} should be enabled by collection`);
+    });
+  });
+
+  // Test 5: Undefined items respect collections
+  test("Undefined items respect collections", () => {
+    const config = {
+      prompts: {
+        'some-other-prompt': true  // explicit
+        // playwright-generate-test is undefined
+      },
+      collections: {
+        'testing-automation': true
+      }
+    };
+    const result = computeEffectiveItemStates(config);
+    
+    const explicitItem = result.prompts['some-other-prompt'];
+    if (explicitItem) {
+      // If the item exists, it should be explicit (might not exist if not a real prompt)
+      // This test is just to ensure undefined vs explicit behavior
+    }
+    
+    const collectionItem = result.prompts['playwright-generate-test'];
+    assert(collectionItem && collectionItem.enabled && collectionItem.reason === 'collection', 
+           'Undefined item should respect collection setting');
+  });
+
+  // Test 6: Multiple collections
+  test("Multiple collections work together", () => {
+    const config = {
+      collections: {
+        'testing-automation': true,
+        'frontend-web-dev': true  // if this exists
+      }
+    };
+    const result = computeEffectiveItemStates(config);
+    
+    // Items from testing-automation should be enabled
+    const testingItem = result.prompts['playwright-generate-test'];
+    assert(testingItem && testingItem.enabled && testingItem.reason === 'collection', 
+           'Testing automation items should be enabled');
+  });
+
+  // Test 7: Instructions and chatmodes work correctly
+  test("Instructions and chatmodes work correctly", () => {
+    const config = {
+      collections: {
+        'testing-automation': true
+      }
+    };
+    const result = computeEffectiveItemStates(config);
+    
+    // Check instructions
+    const instruction = result.instructions['playwright-typescript'];
+    assert(instruction && instruction.enabled && instruction.reason === 'collection', 
+           'Instruction should be enabled by collection');
+           
+    // Check chatmodes
+    const chatmode = result.chatmodes['tdd-red'];
+    assert(chatmode && chatmode.enabled && chatmode.reason === 'collection', 
+           'Chat mode should be enabled by collection');
+  });
+
+  console.log(`\nTest Results: ${passedTests}/${totalTests} passed`);
+  
+  if (passedTests === totalTests) {
+    console.log('🎉 All tests passed!');
+    return true;
+  } else {
+    console.log('💥 Some tests failed!');
+    return false;
+  }
+}
+
+if (require.main === module) {
+  const success = runTests();
+  process.exit(success ? 0 : 1);
+}
+
+module.exports = { runTests };
\ No newline at end of file
diff --git a/test-integration.js b/test-integration.js
new file mode 100644
index 0000000..9e5aad1
--- /dev/null
+++ b/test-integration.js
@@ -0,0 +1,219 @@
+#!/usr/bin/env node
+
+/**
+ * Integration tests for toggle+apply idempotency
+ */
+
+const fs = require('fs');
+const path = require('path');
+const { exec } = require('child_process');
+const { promisify } = require('util');
+
+const execAsync = promisify(exec);
+
+// Change to project directory for tests
+process.chdir(__dirname);
+
+const TEST_CONFIG = 'test-integration.yml';
+const TEST_OUTPUT_DIR = '.test-awesome-copilot';
+
+function assert(condition, message) {
+  if (!condition) {
+    throw new Error(`Assertion failed: ${message}`);
+  }
+}
+
+function cleanup() {
+  // Remove test files
+  if (fs.existsSync(TEST_CONFIG)) fs.unlinkSync(TEST_CONFIG);
+  if (fs.existsSync(TEST_OUTPUT_DIR)) {
+    fs.rmSync(TEST_OUTPUT_DIR, { recursive: true, force: true });
+  }
+}
+
+async function runCommand(command) {
+  try {
+    const { stdout, stderr } = await execAsync(command);
+    return { success: true, stdout, stderr };
+  } catch (error) {
+    return { success: false, stdout: error.stdout, stderr: error.stderr, error };
+  }
+}
+
+function getFilesList(dir) {
+  if (!fs.existsSync(dir)) return [];
+  
+  const files = [];
+  function traverse(currentDir) {
+    const items = fs.readdirSync(currentDir);
+    for (const item of items) {
+      const fullPath = path.join(currentDir, item);
+      if (fs.statSync(fullPath).isDirectory()) {
+        traverse(fullPath);
+      } else {
+        files.push(path.relative(dir, fullPath));
+      }
+    }
+  }
+  traverse(dir);
+  return files.sort();
+}
+
+function setTestOutputDir(configFile) {
+  let configContent = fs.readFileSync(configFile, 'utf8');
+  configContent = configContent.replace('output_directory: ".awesome-copilot"', `output_directory: "${TEST_OUTPUT_DIR}"`);
+  fs.writeFileSync(configFile, configContent);
+}
+
+async function runTests() {
+  console.log('Running integration tests for toggle+apply idempotency...\n');
+  
+  let passedTests = 0;
+  let totalTests = 0;
+
+  async function test(name, testFn) {
+    totalTests++;
+    cleanup(); // Clean up before each test
+    
+    try {
+      await testFn();
+      console.log(`✅ ${name}`);
+      passedTests++;
+    } catch (error) {
+      console.log(`❌ ${name}: ${error.message}`);
+    }
+  }
+
+  // Test 1: Basic toggle+apply idempotency
+  await test("Basic toggle+apply idempotency", async () => {
+    // Create initial config
+    const result1 = await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    assert(result1.success, 'Should create initial config');
+    setTestOutputDir(TEST_CONFIG);
+    
+    // Enable a collection
+    const result2 = await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    assert(result2.success, 'Should enable collection');
+    
+    // First apply
+    const result3 = await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    assert(result3.success, 'First apply should succeed');
+    
+    const files1 = getFilesList(TEST_OUTPUT_DIR);
+    assert(files1.length > 0, 'Should have copied files');
+    
+    // Second apply (idempotency test)
+    const result4 = await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    assert(result4.success, 'Second apply should succeed');
+    
+    const files2 = getFilesList(TEST_OUTPUT_DIR);
+    assert(JSON.stringify(files1) === JSON.stringify(files2), 'File lists should be identical');
+  });
+
+  // Test 2: Toggle collection off then on restores same state
+  await test("Toggle collection off then on restores same state", async () => {
+    // Create initial config and enable collection
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    // First apply
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const files1 = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Toggle collection off
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation off --config ${TEST_CONFIG}`);
+    
+    // Apply (should remove files)
+    fs.rmSync(TEST_OUTPUT_DIR, { recursive: true, force: true });
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const files2 = getFilesList(TEST_OUTPUT_DIR);
+    assert(files2.length === 0, 'Should have no files when collection disabled');
+    
+    // Toggle collection back on
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    // Apply again
+    fs.rmSync(TEST_OUTPUT_DIR, { recursive: true, force: true });
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const files3 = getFilesList(TEST_OUTPUT_DIR);
+    
+    assert(JSON.stringify(files1) === JSON.stringify(files3), 'File lists should be restored');
+  });
+
+  // Test 3: Explicit overrides are maintained across collection toggles
+  await test("Explicit overrides are maintained across collection toggles", async () => {
+    // Create initial config and enable collection
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    // Add explicit override 
+    await runCommand(`node awesome-copilot.js toggle prompts playwright-generate-test off --config ${TEST_CONFIG}`);
+    
+    // Apply and count files
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const files1 = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Toggle collection off and on
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation off --config ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    
+    // Apply again
+    fs.rmSync(TEST_OUTPUT_DIR, { recursive: true, force: true });
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const files2 = getFilesList(TEST_OUTPUT_DIR);
+    
+    assert(JSON.stringify(files1) === JSON.stringify(files2), 'Explicit overrides should be maintained');
+    
+    // Verify playwright-generate-test is still not present
+    const hasPlaywrightTest = files2.some(f => f.includes('playwright-generate-test'));
+    assert(!hasPlaywrightTest, 'Explicitly disabled item should stay disabled');
+  });
+
+  // Test 4: Multiple apply operations are truly idempotent
+  await test("Multiple apply operations are truly idempotent", async () => {
+    // Setup
+    await runCommand(`node awesome-copilot.js init ${TEST_CONFIG}`);
+    setTestOutputDir(TEST_CONFIG);
+    await runCommand(`node awesome-copilot.js toggle collections testing-automation on --config ${TEST_CONFIG}`);
+    await runCommand(`node awesome-copilot.js toggle prompts create-readme on --config ${TEST_CONFIG}`);
+    
+    // Apply multiple times
+    for (let i = 0; i < 3; i++) {
+      await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    }
+    
+    const files1 = getFilesList(TEST_OUTPUT_DIR);
+    
+    // Apply once more
+    await runCommand(`node awesome-copilot.js apply ${TEST_CONFIG}`);
+    const files2 = getFilesList(TEST_OUTPUT_DIR);
+    
+    assert(JSON.stringify(files1) === JSON.stringify(files2), 'Multiple applies should be idempotent');
+  });
+
+  console.log(`\nIntegration Test Results: ${passedTests}/${totalTests} passed`);
+  
+  cleanup(); // Final cleanup
+  
+  if (passedTests === totalTests) {
+    console.log('🎉 All integration tests passed!');
+    return true;
+  } else {
+    console.log('💥 Some integration tests failed!');
+    return false;
+  }
+}
+
+if (require.main === module) {
+  runTests().then(success => {
+    process.exit(success ? 0 : 1);
+  }).catch(error => {
+    console.error('Test runner error:', error);
+    cleanup();
+    process.exit(1);
+  });
+}
+
+module.exports = { runTests };
\ No newline at end of file
diff --git a/test-new-config.yml b/test-new-config.yml
new file mode 100644
index 0000000..d8051d0
--- /dev/null
+++ b/test-new-config.yml
@@ -0,0 +1,35 @@
+# Awesome Copilot Configuration File
+# Generated on 2025-09-21T22:44:51.675Z
+#
+# This file uses effective state precedence:
+# 1. Explicit item settings (true/false) override everything
+# 2. Items not listed inherit from enabled collections
+# 3. Otherwise items are disabled
+#
+# To use:
+# - Enable collections for curated sets of related items
+# - Explicitly set individual items to true/false to override collections
+# - Items not mentioned will follow collection settings
+#
+# After configuring, run: awesome-copilot apply
+#
+
+version: "1.0"
+project:
+  name: "My Project"
+  description: "A project using awesome-copilot customizations"
+  output_directory: ".awesome-copilot"
+prompts:
+  playwright-generate-test: false
+instructions:
+chatmodes:
+collections:
+  azure-cloud-development: false
+  csharp-dotnet-development: false
+  database-data-management: false
+  devops-oncall: false
+  frontend-web-dev: false
+  project-planning: false
+  security-best-practices: false
+  technical-spike: false
+  testing-automation: true