How does CRM on Demand determine the highest priority Task?

In the "My Homepage -> My Open Tasks" List there is a sortable priority column. If you have a number of tasks in the list with different priorities and click on the priority column they will be sorted in descending order by priority as follows:
"1-High"
"2-Medium"
"3-Low"
I have tried editing the order on the Edit Picklist screen for the Activity Priority field (by navigating to Admin -> Application Customization -> Activity -> Activity Field Setup) but this appears to have no effect on the priority sort order on in the Task List. I have also tried adding new values to the picklist and they always appear as the lowest priority.
So my question is how does CRM on Demand determine that the priority picklist value "1-High" is the highest priority when sorting the tasks?

There is a sort order on the activity applet based upon the priority field. As 1 comes before 2 and 3, it would be sorted to the top.

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