Group Policy is processed in the following order.
• Local: The local Group Ploicy stored within Windows Server 2003 locally is processed first.
• Site: Any GPOs that have been linked to the Active Directory Site are applied next.
• Domain: Any GPOs that have been linked to the Active Directory Domain are applied next. Multiple domain-linked GPOs are applied synchronously and the administrator specifies the order of GPOs linked to a domain.
• Organizational unit (OU): Any GPOs that have been linked to the Active Directory Organizational Unit (OU) are applied next.
The Group Policy processing order means that the local GPO is processed first, and GPOs that are linked to the organizational unit of which the computer or user is a direct member are processed last, which overwrites settings in the earlier GPOs if there are conflicts. If there are no conflicts, then the earlier and later settings are combined.