This is how preferences work: VTAC will try to give your highest preference. Once you have an offer for some preference, all the preferences below it are discarded, because according to your preferences, you want that course more than the courses below it. This means that putting courses that require a higher ENTER than courses with a higher preference is useless (e.g: if you put Medicine 2nd, and Engineering 1st, your 2nd preference is never going to come to fruition, because if you made the entry requirements for Medicine, you would have been offered Engineering instead, since you prefer it more than Medicine).
Second and third round offers simply try to fit you into higher preferences. Once you get your first preference, you're out of the VTAC game. You need to make a special application if you decide you want an alternative course to your first preference.