I never could figure out how the priority system works. I just throw all that kind of thing into Deep Storage Units and forget about it.
Its quite simple actually. Items added to the ME network will always go to the storage with the highest priority number possible(unless there is identical items already stored in a lower priority storage. If so you might have to remove it all and add it again).
It used to be a bit annoying to change the priority once(1.4.7) since you had to shift+click the device with a wrench. But now its super simple with the "new" AE(1.5.2+), where its part of the UI.
Also priority is not set for each storage disc, but for its housing: ME drive or ME chest. So if you set a drive to priority 10, all the drives in it will have priority 10. The third item that uses priority is the storage bus'. Basically works the same as for the ME chest, now you just set priority for a non-ME inventory.
So lets imagine you have the following network:
1: A storage disc with priority 1 that is unformatted.
2: A Storage bus on a chest with priority 2 programmed with a variety of items including cobble(contents of this chest could then be destroyed by whatever mean you prefer).
3: A storage disc with priority 3 but preformatted for cobble.
-Now you put a piece of cobble into the system it will go to 3 since it has the highest priority and has room/allowance to add cobble.
-Now if 3 is full and you continue to add cobble it will go to 2 instead, and as long as your disposal can keep up it keeps going there as long as 3 don't have room.
-Lets say you now find a new item, sandstone, and put it into the system. 3 only allows cobble, 2 only accept those items you already programmed it to know so it doesn't accept the sandstone either. All that's left is 1 and that's where the sandstone ends. Now you might suspect that you end up finding a lot of sandstone later, so you can now choose to make a preformatted disc with Sandstone and add it to the drive with the cobble disc. And you add sandstone to the storage bus aswell so once the disc is full, it is also disposed of.
- Now lets imagine that you loot a lot of chests/mob loot bags and you get a lot of Wooden Pickaxes. And you hate those and know that you will never use them for anything. So you added it to 2(the storage bus). Next time you add a Wooden Pickaxe to the network its automatically disposed of and it will never again clutter the storages.