Each personalization campaign is defined by a set of variations. Every variation is linked to a target. You can either use an existing target or create one right from the campaign editor UI. Each variation represents a set of changes to the pages defined in the campaign settings.
Sometimes you might have a situation where a visitor will fall in two different targets that are linked to respective variations within a single campaign. In this case the visitor will only be presented with the first variation that he was matched with and the other variation will be ignored. The order of precedence is the same as the order of the variations in the UI.