In general all events come the same form.
A condition that picks objects (the basic picklist is made in the first condition)
(in the same event, or as sub) A condition that starts picking from the basic picklist and refines
(in the same event, or as sub) More conditions that start picking from the refined picklist and refines
.......................... actions
In your case.
'Bullet' is overlapping another object 'Sprite'. (now the basic picklist contains 3 sprites)
'Sprite' > pick top/bottom
or
'Bullet' is overlapping another object 'Sprite'
system > pick random instance 'sprite'
or
'Bullet' is overlapping another object 'Sprite'
system > pick nth instance 'sprite', instance = zero
or
'Bullet' is overlapping another object 'Sprite'
Sprite > pick nearest to bullet.x .. bullet.y
The second condition always starts picking (choosing) from those picked in the first condition.
So, it always starts with those 3 'sprites'.