WebSphere Application Server uses this setting to find and load new classes for an application in the order specified in this setting. The "Parent First" class-loader class-loader mode causes the class loader to delegate the loading of classes to its parent class loader before attempting to load the class from its local class path. This value is the default for the class-loader policy and for standard JVM class loaders. The "Parent Last" class-loader mode causes the class loader to attempt to load classes from its local class path before delegating the class loading to its parent. Using this policy, an application class loader can override and provide its own version of a class that exists in the parent class loader.

Source: IBM Knowledge Center