How does Distributed file system (DFS) and File replication services (FRS) handle files changes made at 2 physcial sites.

We are using Windows 2000 DFS and I had a question about how DFS/FRS handles files that are opened at two seperate sites from the same DFS share. Say for example we have a DFS share called \\domain\dfs\share1. We have 2 sites connected via VPN that replicate every 1 hour. If someone at site1 opens a file called file1.doc and makes a change and sometime before replication occurs for the file another person from site2 opens the file and makes a change, what happens. Both people saved the documents of course. Does it take the last saved copy? Does it merge the data? This could potentially be an issue for some files in our site.