In other words, for mods working with the same files..
Mod-1 has mods A & B
Mod-2 has mod C
Install order:
1) Mod-1
2) Mod-2
Result:- Only mod C will be in effect. The mod files are not merged by JSGME, but backed up, and replaced. If you have a look at the 'Super-Mods' (TMO & RFB), They've tried to include many of the small mods as possible, so as to get around the 'file replacement issue'.
If you want to, you can delve into the small mods and replicate the changes into the bigger mods yourself - I do this. You must just be carefull of what you change as some changes are linked to other files.