This is a more complex section since most of the precedences are determined by how you've set up areas (aka sarea) on your image collection. The default section should always be present, but the others are named for the areas you've chosen. The algorithm is: look for a precedence setting of either models or sets for the given sarea, and failing that, return the default value. So if you have sareas of favourites, amkingdom and usenet and want indexes to show models thumbnails in favourites and amkingdom but set thumbnails in usenet, you would make this section read:

 <precedence>
  <default>models</default>
  <usenet>sets</usenet>
 </precedence>