Standard GPO Inheritance Rules in Organizational Units
Any unconfigured settings anywhere in a GPO can be ignored since they are not inherited down the tree; only configured settings are inherited. There are three possible scenarios:
If a GPO has settings that are configured for a parent Organizational Unit, and the same policy settings are unconfigured for a child Organizational Unit, the child inherits the parent's GPO settings. That makes sense.
If a GPO has settings configured for a parent Organizational Unit that do not conflict with a GPO on a child Organizational Unit, the child Organizational Unit inherits the parent GPO settings and applies its own GPOs as well.
If a GPO has settings that are configured for a parent Organizational Unit that conflict with the same settings in another GPO configured for a child Organizational Unit, then the child Organizational Unit does not inherit that specific GPO setting from the parent Organizational Unit. The setting in the GPO child policy takes priority, although there is one case in which this is not true.
If the parent disables a setting and the child makes a change to that setting, the child's change is ignored. In other words, the disabling of a setting is always inherited down the hierarchy.