Group Policy Basics - Part 1.3 GPO Processing & GPO Precedence

Processing GPOs: Precedence
Because it's possible (and even likely) that you may have multiple GPOs to apply, there is always the possibility that these GPOs will have conflicting settings. In this case, how do we know which GPO will win and have its settings applied? The simple rule to remember is that the last GPO applied will overwrite any settings applied earlier. And the GPOs closest to the client location in the directory structure will be applied last. The order goes as follows:
• Local
• Site
• Domain
• Organizational Unit
What this means is that if you've set something on your Local GPO but your domain administrators require a different setting, your local setting will be overwritten. The same thing applies to situations where the domain may have a default policy but your busines unit may have more specific needs. In this case, a default setting can be configured and your business unit can override this setting to apply the one your group requires.
In our example above, suppose that the Default Domain Policy GPO set a disk quote for the domain at 50 MB. However, your business unit requires that your workstations have 100 MB quotas. Your administrators could set a policy at the OU level to allow these settings for your group. Your directory structure might look like this:

[shabeelaboobacker]

Superb!!!
Simple and powerful training of GPM.