Let us take see a simple example of how the installation order of solution and patch works in case of Dynamics 365 CE.
Suppose we have a Solution A with only Account Number field with display name renamed to Account Number from Solution A.
Now this solution is exported as managed and imported into the target environment
Now let us create a new solution which renames this field as “Account Number from Solution B” and then import this as managed in the target environment.
So as expected we’d see the display name renamed to Account Number from B as this solution was installed after the solution A.
Now let us create Patch for the first solution, Solution A and rename the field to Account Number from Solution A Patch and import this patch to Target Environment.
After importing the patch solution in Target Environment
We can open the account record and check for the label of the account number field. Interestingly we will see the value to be “Account Number from Solution B”, which was set by the solution B. So installing our patch for solution A didn’t change it.
It is because the platform still gives precedence to the installation order of the solution and not patch. Although we had the patch installed for Solution A after import of Solution B, putting a patch didn’t change the label for the account number as it is belonged to the solution that was imported before Solution B.
Hope it helps..