In fighting games, the priority of an attack refers to its ability to cleanly beat other attacks of the same type, resulting in the character using the higher priority attack interrupting the opponent's lower priority attack and successfully dealing damage to the opponent.
There are two types of attack priority: physical attack priority and projectile priority.
Physical attack priority
Just as a punching arm in real life can be hit, most physical attacks will have a collision hitbox within the attacking hitbox to identify that limb as an extension of the character's body that logically, should be able to be hit. If that collision hitbox is hit, the attack is interrupted.
Physical attack priority is determined by using that attack of the character in an attempt to trade hits with an opponent using an attack of a similar type, such as a standing punch against another standing punch. Attacks that tend to trade hits or be beaten by other attacks very often are considered to be low priority, while those that can cleanly beat other attacks very often are marked as high priority.
An Infinite Priority attack is either an attack which possesses a red attacking hitbox (CLSN1) and a blue collision hitbox (CLSN2) that is neither within reasonable range of where the intended 'attack' part of the attacking hitbox is supposed to be (or within the hitbox at all), or an attack where both the red attacking hitbox and the blue collision hitbox overlap exactly, due to a limitation in the M.U.G.E.N engine that will only allow it to read the red attacking hitbox.
When an attack with infinite priority is used to trade blows, the opponent's attacking hitbox will be unable to make contact with the character's collision hitbox, while the attacking hitbox of the first character will be capable of making contact with the opponent's collision hitbox; as such, the first character will always be able to hit the opponent out of its move, providing the opponent does not have Super Armour.
While Infinite Priority attacks are generally frowned upon by the M.U.G.E.N community, with some guides even dedicate sections to ensuring that attacks are not infinite priority through the proper deployment of collision hitboxes, they are still acceptable if it's for the sake of porting accuracy, or if the animation clearly shows that hitting the location of the attack hitbox would not be logically expected to interrupt the attack (such as a sword swing or plasma blast).
If the hitbox of a projectile comes into contact with the hitbox of another projectile, they will interact. The priority of the projectile determines the outcome.
Every non-helper projectile has two priority-related traits, defined in the engine documentation as follows:
Specifies the projectile priority. If the projectile collides with another projectile of equal priority, they will cancel. If it collides with another of lower priority, it will cancel the lower priority projectile, and the higher priority one will have its priority decreased by 1. Defaults to 1.
Specifies the number of hits that the projectile can impart on an opponent before it is removed. Defaults to 1.
These two values determine the behavior of the projectile when it interacts with another projectile.
Note that projectiles with multiple hits of priority 1 will lose a hit on interacting with a higher priority projectile, but still continue to their target.