Understanding Group Policy Processing

          GPOs are applied in order that allows user to predict which settings are effective when conflict settings in GPOs that apply to a user or computer. GPOs that are latest applied take overwrite any conflicting policy settings that were applied earlier.
GPOs are applied in the following order:
1. Local GPOs. Each operating system that is
running Windows 2000 or newer potentially
has a local Group Policy configured already.
2. Site GPOs. Policies that are linked to sites are processed next.
3. Domain GPOs. Policies that are linked to the domain are processed next. There often are multiple polices at the domain level. These policies are processed in order of preference.
4. OU GPOs. Policies linked to OUs are processed next. These policies contain settings that are unique to the objects in that OU. For example, Sales users might have special required settings. You can link a policy to the Sales OU to deliver those settings.
5. Child OU policies. Any policies that are linked to child OUs are processed last.