Understanding Ship-To Location hierarchy

Dear All,

I would like to know about the hierarchical setups for Ship-to Locations. For example, while setting up SUT info for a vendor location, we see the following details about Ship-to Location (under SUT applicability) :

"If you want this field's value to be passed from a higher level in the control hierarchy, select the Default option. If you want the transaction to inherit these options from the vendor location, select Specify, and enter a ship to location."

(The above description is taken from http://docs.oracle.com/cd/E27605_01/fscm91pbr2/eng/psbooks/fspr/book.htm?File=fspr/htm/fspr04.htm%23ge0bf214a544bf14c_ef90c_10e0791cc9f__1005