I don’t think that student A would be disadvantaged compared to student B if student A has good marks. For me, I got a reserve for my first choice and then got offers for my second and third choices so I don’t think the preference places matter, it’s just about who did the best in terms of the exam, grades, etc.
For your last question, are you asking if your current school will know if you applied for another school? Or if your first, second, third preference schools will know if you applied to other schools?