The display list refers to the sequence of all the objects on the canvas, from background (the “bottom” of the display list) to foreground (the “top”).
If two objects overlap, the one above the other in the display list means the one closer to the foreground, which will appear in the area of overlap and obscure the one below. By default, new objects are always created at the top of the display list (and hence in front of all other objects), but you can re-order the display list.