Hierarchy is a guiding force behind how we process layouts. Or in simpler words: how we understand stuff on the screen. It is ESSENTIAL to know well.
Experienced designers manage to design the right hierarchy without even thinking. If you’re a beginner though it’s really good to use the hierarchy strips exercise for most of your projects. I created the hierarchy strips method to figure this out, called Hierarchy Strips, and you can find out more about it in this video.
Hierarchy is all about the rule of proximity which is the first Gestalt Law that designers should focus on.