What is the exact priority interaction between tag and category notification settings?

Continuing the discussion from What happens for a post in a muted category with a watched tag?:

There are preferences for Watched / Tracked / Watching First Post / Muted for both categories and tags. From the linked post above, I understand that setting a category Muted overrides tag Watched.

Can someone clarify for me exactly how this works? Is this a case of Muted beats Watched? (That is, the same thing would happen if a tag is Muted in a Watched category?) Or is it that any non-default Category settings take precedence over the settings for individual tags?

Also: I assume that the user setting per topic overrides anything to do with Tag or Category watches. Correct?

I don’t think that is correct. Based on my testing, ff a user has muted a category, but is watching a tag, they will receive notifications for topics in the muted category that are tagged with their watched tag. The tagged topic will also appear in the user’s latest topics list.

Interestingly, if a user is watching a category, but has muted a tag, topics in the category tagged with the muted tag will not show up in the category’s latest topics list, but the user will receive a notification for topics with the tag.