Comprehensive and Detailed Explanation From Exact Extract of Nutanix End User Computing documents:

According to the Prism Central Guide on Storage Policy Management and Precedence Rules:

Precedence Rule: Nutanix documentation explicitly states: "If you assign a category associated with a non-default storage policy to an entity and also enable the Enable 'Default-Storage' policy toggle switch, the non-default storage policy gets precedence over the default storage policy."

Explanation: The "Default-Storage" toggle acts as a fallback or baseline policy assignment (specifically linking the VM to the Storage: $Default category). However, if the administrator specifically tags the VM with a user-defined category (like DesktopVM) that has its own specific storage policy, the system honors the specific (non-default) policy over the generic default one.

Result: The "expected" settings (if the administrator expected the Default policy to override the specific one because they toggled the switch) are not applied because the specific category policy takes priority.