Context. The Draco nebula is a high Galactic latitude interstellar cloud observed at velocities corresponding to the intermediate velocity cloud regime. This nebula shows unusually strong CO emission and remarkably high-contrast small-scale structures for such a diffuse high Galactic latitude cloud. The 21 cm emission of the Draco nebula reveals that it is likely to have been formed by the collision of a cloud entering the disk of the Milky Way. Such physical conditions are ideal to study the formation of cold and dense gas in colliding flows of diffuse and warm gas. Aims. The objective of this study is to better understand the process of structure formation in a colliding flow and to describe the effects of matter entering the disk on the interstellar medium. Methods. We conducted Herschel-SPIRE observations of the Draco nebula. The clumpfind algorithm was used to identify and characterize the small-scale structures of the cloud. Results. The high-resolution SPIRE map reveals the fragmented structure of the interface between the infalling cloud and the Galactic layer. This front is characterized by a Rayleigh-Taylor (RT) instability structure. From the determination of the typical length of the periodic structure (2.2 pc) we estimated the gas kinematic viscosity. This allowed us to estimate the dissipation scale of the warm neutral medium (0.1 pc), which was found to be compatible with that expected if ambipolar diffusion were the main mechanism of turbulent energy dissipation. The statistical properties of the small-scale structures identified with clumpfind are found to be typical of that seen in molecular clouds and hydrodynamical turbulence in general. The density of the gas has a log-normal distribution with an average value of 103 cm-3. The typical size of the structures is 0.1−0.2 pc, but this estimate is limited by the resolution of the observations. The mass of these structures ranges from 0.2 to 20 M⊙ and the distribution of the more massive structures follows a power-law dN/ dlog (M) ~ M-1.4. We identify a mass-size relation with the same exponent as that found in molecular clouds (M ~ L2.3). On the other hand, we found that only 15% of the mass of the cloud is in gravitationally bound structures. Conclusions. We conclude that the collision of diffuse gas from the Galactic halo with the diffuse interstellar medium of the outer layer of the disk is an efficient mechanism for producing dense structures. The increase of pressure induced by the collision is strong enough to trigger the formation of cold neutral medium out of the warm gas. It is likely that ambipolar diffusion is the mechanism dominating the turbulent energy dissipation. In that case the cold structures are a few times larger than the energy dissipation scale. The dense structures of Draco are the result of the interplay between magnetohydrodynamical turbulence and thermal instability as self-gravity is not dominating the dynamics. Interestingly they have properties typical of those found in more classical molecular clouds.