Hi....,
 Severity:
         Relative Impact of the Defect i.e How far the    
applications is affected by this defect...(Low, Medium, 
High, Critical..)
 
  Priority:
         Relative Importance of the defect i.e Giving 
preference to the Defect...(High, Medium, Low)

Severity means how badly it harms the system .
Priority means how urgently bug is needed to fix. 
Severity is constant....whereas priority might change 
according to schedule
Type of Severity:
                 Critical->defect having high problem
                 Major.
                 Medium.
                 Minor.
                 Cosmetic->Glamour look.
Type of Priority:
                High.
                Medium.
                Low.

Priority - Priority is the order in which developer has to 
fix the bug.
Severity - Severity is how seroisly the bug is impacting 
the application.

Eg.


High Priority & High Severity: A show stopper error which 
occurs on the basic funcationality of the application . 
(Eg. A site maintaing the student details, on saving record 
if it, doesn't allow to save the record then this is high 
priority and high severity bug.)

High Priority & Low Severity: The spell mistakes that 
happens on the cover page or headin or title of an 
application.

High Severity & Low Priority: The application generates a 
show stopper or system error, (for which there is no 
workaround) but on click of link which is rarely used by 
the end user.


Low Priority and Low Severity: Any cosmetic or spell issues 
which is with in a paragraph or in the report (Not on cover 
page, heading, title).