I think both terms should be clear. However, I have improved the note a bit to make sure that it is not the whole file that overrides the one below but really just format that overrides the same format in a file farther down (and I fixed another farther - I hate to be a non native speaker, hehe).

New text:

```
  When Django searches for a certain format, it will go through all given
    Python paths until it finds a module that actually defines the given
    format. This means that formats defined in packages farther up in the list
    would take precendence over the same formats in packages farther down.
```