As explained to me by a very helpful DWR employee:
Take the total number of tags in a given unit...call it 100. Lifetime license holders get first priority for those tags. Lets say they take 20, leaving 80 for everyone else. 15% of those 80 tags are assigned to Dedicated hunters (in this case 12 tags). Anybody who is already part of the DH program is first in line for those 12 tags. So maybe they take 6 tags in this example. Now we have the DH drawing for new applicants - separate and distinct from the other 3 drawings (LE, general, O.I.L.). You apply for the DH program and can make up to 5 choices for your hunt area. You will most likely draw to become a DH and then they will look at your hunt choices to see if any spots are open in your 1st choice, 2nd choice, etc. Whichever area you draw will be your area for all 3 years of your enrollment.
If you don't draw for the DH program you would then be included in the general draw, assuming you applied for a tag in that drawing.