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The Priority Matrix is used to arrive at the Priority given the Urgency and the Impact. This ensures that there is consistency in determining the Priority of the record. Priority matrix can be defined for each service.
Click on 'Urgency, Impact & Priority' option on the right hand side panel.
Click on 'Priority Matrix'. The Priority Matrix is displayed.

Select a 'Service'.
For each combination of Impact and Urgency select the 'Priority'. Based on the Urgency and Impact. this matrix is used to set the Priority for the record during submission.
Enabling the setting 'Allow users to override the Priority', allows users to override the predetermined Priority while submitting the record.
Enabling the setting 'Apply this configuration for all the services' sets this matrix configuration for all services.
Click on 'Update'.