Binary droplet collision is a fundamental aspect of various natural phenomena and industrial applications. In this work, direct numerical simulation of coalescence and separation of binary droplet collision is performed over a wide range of Weber numbers and impact factors. The incompressible Navier–Stokes equations are solved by the finite volume approach, coupled with the volume of fluid method. To address the inaccurate prediction of thin lamella in simulation, a lamella stabilization method is introduced to resolve the lamella by adjusting the grid resolution. Compared with experimental data, it is validated that the lamella can be accurately and fully captured with this lamella stabilization method. Moreover, the analysis of shape and energy during the collision is conducted, and the variation of lamella is described in detail, particularly the evolution of the thickness of lamella. The results suggest that for obtaining the full variation of lamella, the maximum refinement size of the grid can reach D/4096. It is also found that without lamella stabilization, excessive dissipation can lead to the failure of predicting coalescence and separation, especially for the cases in the transition between coalescence and separation. Furthermore, even if the same collision outcome can be obtained without lamella stabilization, the number and size of droplets have obvious differences.