If you have a repo called something.repo.rpmnew, it will be ignored. You would have to rename it to something.repo.
To oversimplify, say that you have rpmforge, base, and epel repos. Say that all of them have versions of perl. However, these versions may conflict with each other and break things.
So, if you gave base and updates priority of 1, then the others, even if they have a later version of perl, won't install it. The downside is that you're running the older version. The upside is that you don't risk this newer version of perl breaking some other package that you'd forgotten.
There are disadvantages--as the wiki page in question mentions, the late Seth Vidal disliked it.