both commands will create software queues in a router. The software queueing is only involved, if the hardware queue on an interface is full. In other words: unless you overload an interface there is NO software queueing involved at all. This includes "priority" and "bandwidth".
The priority command will create a strict priority queue. This means packets classified into this queue are serviced immediately before all other packets - thus low latency. There is however an upper limit established through a policer that is automatically enabled with the priority command.
The "bandwidth" command will create a software queue, which will be serviced at least with the configured bandwidth.
So in brief with an example:
priority 30 => low latency queue with a policer at 30 kbps
bandwidth 30 => normal queue with a minimum guaranteed bandwidth of 30 kbps
just one remark: "reserves the bandwidth" does not mean "blocks the bandwidth". It means once the traffic requests the bandwidth, it will get it. However other traffic can use the bandwidth if it is not needed by the priority class.
You might want to read through: "Comparing the bandwidth and priority Commands of a QoS Service Policy" at
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