GPOs are processed in the following order: The local GPO is applied. GPOs linked to sites are applied. GPOs linked to domains are applied. GPOs linked to organizational units are applied. For nested organizational units, GPOs linked to parent organizational units are applied before GPOs linked to child organizational units are applied.
At the level of each organizational unit in the Active Directory hierarchy, one, many, or no GPOs can be linked. If several GPOs are linked to an organizational unit, their processing is in the order that is specified by the administrator, on the Linked Group Policy Objects tab for the organizational unit in GPMC.
Long in short, GPO is applied with the order: local group policy, site, domain, organizational units. Also, the settings in "Windows SBS User Policy" GPO is applied, the "Not configured" in "Windows SBS Client - Windows XP Policy" GPO is ignored. You can run “gpresult /v” or collect the GPMC log to check which GPOs are applied to the clients.
The policies are applied in the hierarchy (LSDOU) 4.Organizational Units. GP applied in the following hierarchy Local system , site , Domain , organisational unit. Long in short, GPO is applied with the order: local group policy, site, domain, organizational units.
Note The order in which GPOs are processed is significant because when policy is applied, it overwrites policy that was applied earlier. The Group Policy objects (GPOs) that apply to a user (or computer) do not all have the same precedence. Settings that are applied later can override settings that are applied earlier.
GPOs linked to organizational units are applied. For nested organizational units, GPOs linked to parent organizational units are applied before GPOs linked to child organizational units are applied. The GPO with the lowest link order is processed last, depends on how the administrator numbers them in the OU.