That is correct. The order of your course preferences on UAC reflects your level of interest in each of the courses that you applied for. A student’s highest preference means that this is the student’s most preferred (or dream) course. If they end up receiving an offer for their highest preference, they will not be considered for their remaining preferences, as the assumption is that the student was made an offer for the course they wanted the most. In terms of your other question, UAC states the following:
“Your chance of being selected for a course is not decreased because you placed it as a lower order preference. Similarly, you won’t be selected for a course just because you entered that course as a higher order preference.”
This means that, should you be eligible to be considered for a particular preference, you will be considered equally with all other applicants. For example, if you are not made an offer for your highest preference, you will be considered in the same manner for your second preference, and so on.
Generally speaking, universities ask applicants to place particular courses as their first preference when this constitutes a requirement for some sort of scheme, such as the Schools Recommendation Scheme.
I hope this helps!