Is there collision avoidance between the drones during a show?

No, by default all drones follow preprogrammed flight paths individually, which should be designed and validated before flight to have a safe minimal distance between drones at all times. The only drone show system we know of that implements onboard real-time collision avoidance during flight is our own system at CollMot Robotics Ltd., where drones communicate with each other actively and avoid possible collisions using custom swarm intelligence.

Is there any way to set a dual layer geofence?

Yes, if your national aviation authority requires a dual layer geofence, it can be set up using the Skybrush firmware parameters starting with SHOW_HFENCE_..., documented here.