A screen can have more than one playlist assigned to it, each with its own schedule. Most of the time their windows do not collide. But sometimes two playlists are both due to play at the same moment, and the screen has to decide what to do.
By default, it shares the time. When several playlists are scheduled at once, the screen cycles through all of them, giving each its turn. Nobody has to pick a winner; the content takes turns.
When something has to take over
Some content cannot wait its turn. An evacuation notice, a site-wide alert, a time-critical announcement: these need the whole screen, now, with nothing else cycling in between.
That is what priority does. A playlist marked as priority takes exclusive control of its screens for as long as its schedule is active. Everything else steps aside. When the window ends, or you switch the priority off, the screen returns to its normal rotation as if nothing happened.
It is the difference between content that joins the rotation and content that interrupts it. Most playlists join. A few, by design, interrupt.