The main practical difference is how the command signal is sent.

An SB-700 used as commander is usually more flexible than the camera’s pop-up commander: it has more power, can reach slaves farther away, and its head can be aimed/swiveled toward remote flashes while minimizing spill toward the subject.

A camera’s built-in commander uses the pop-up flash, which can contribute some light to the scene even when used mainly for control. At close distances, that extra light may be noticeable or unwanted.

If you use the pop-up flash as commander, the SB-700 is free to be placed off-camera and used as a remote flash, which is often the most useful setup.

In many Nikon bodies, mounting a flash on the hot shoe disables the pop-up flash, so you generally would not use both as commanders at once. In that case, there is no real “precedence” question—the hot-shoe flash setup effectively determines operation. If both can be active on a specific setup, the key difference is still that the SB-700 offers better control and range, while the pop-up may add unwanted on-axis light.