What is the proper place to add directories and files to ignore?

Similar to Windows File Explorer, I suppose. Several ways to get to the same place.

How did you set up a priority question? Normally you’d only want to “check” one way.
For me, the different ways of filling the green checkmark trees worked independently.

Looking at an Export As Command-line should show what you actually got, in theory.
exclude should apply to all of the source paths specified for The BACKUP command.
This means that it should hold even if you GUI-green-check the same path two ways,
however it still seems a safer plan to just pick one way of selecting, and just use that.

If you’re familiar with Windows folder environment variables, Duplicati uses them too:

Environment.SpecialFolder Enum (.NET Framework API)