Explanation
The app local directories move to second in the priority list. This is explained in the Splunk documentation, which states:
In a clustered environment, the precedence of configuration files changes slightly from that of a standalone deployment. The app local directories move to second in the priority list, after the peer-apps local directory.
This means that any configuration files in the app local directories on the individual peers are overridden by configuration files of the same name and type in the peer-apps local directory on the master node.