Project Backlog
Project Backlog (or Product Backlog) is the current list of user stories for the Project. The user stories must be organized in groups (e.g. "must-have", "nice-to-have", $\dots$), and prioritized.
Assign higher priority to user stories that have the biggest impact and can be done most easily.
The Pareto principle (also known as the 80/20 rule) states that, for many events, roughly $80\%$ of the effects come from $20\%$ of the causes! In Software Development, most of the teams have observed that $20\%$ of the features provide $80\%$ of the value. Therefore, prioritization of the stories (based on agreed upon parameters), enables the teams to deliver maximum value.
We already promote prioritization by requiring you to organize your user stories into categories like "must-have" and "nice-to-have". You can further refine these groups by e.g. identifying a subset of must-have as "core requirements" or a subset of your "nice-to-have" as "out-of-scope" or "won't-have" categories. By these refinements, you create a higher "signal-to-noise" ratio which will lead to a more successful product.
User Stories can be added, modified or removed from the Backlog during the development of your project.
Iteration Backlog
Before starting an iteration, you must select a subset of user stories from the Project Backlog that are planned to be delivered during the iteration. You can further divide each user story into tasks. The tasks are the activities performed to deliver a user story.