All of this is covered in the Windows documentation on shares, file permissions, and groups.
Scenario 1: Everyone will have full access. Access is cumulative. Scenario 2: Everyone but Guest will have full access
As to why some users only had read-only in Scenario 1, it would have to be that some users have full vs. read-only file (NTFS permissions).
Neither local or domain group takes priority. Share permissions are cumulative.
Share permission function at the layer where the client accesses the share. File permissions function at the layer where files are accessed. I.e., if a user has no share permissions, but Full Control NTFS permissions, they won't be able to get to the files. Additionally, if they have all share permissions but no file permissions, they will be able to connect to the share, but not be able to do anything with the files.
Best practice is to always give minimal access. So permissions on shares and the files should be given only to the group(s) that needs to access them. Microsoft's approach is to create a domain group and a local group. Put the domain group in the local group, and then assign permissions to the local group.