The draworder command is only relevant for the 2D Wireframe visualstyle. When the 2D Wireframe visual style is active AutoCAD uses a 2D display list to generate what is seen on the screen.
With the visualstyle set to 2D Wireframe createa white rectangle in the top view that lies on the XY plane. Using OSNAP Nearest, create a red line collinear to the top line of the rectangle but it doesn't go to the ends. If you cannot see the red line use order to place it in front of the white line. YOU should see something like this.

Now move the red line in the + Z direction (towards you). It's appearance will not change.
Now give the draworder command and change the redline to "back". The red line is obscured by the white line of the rectangle although the red line is technically in front.
Note the the WCS coordinate icon has white lines and XY. This is an indication that the 2D Visualstyle is active. Now clicking on the view cube slightly rotate the scene. As you do note that the axis icon changes to the a red-green-blue axes indicating that the visual style has change to wireframe (a 3D mode). You can clearly see that the red line is clearly in front of the while line.
Here's a view while rotating the viewcube.

Here's what you see after the view rotation. The visualstyle returns to 2D Wireframe.

Now go back to the top view. The red line cannot be seen. Changing the visualstyle to Wireframe will make the red line visible because in 3D space the red line is closer to the observer and the concept of draworder is not supported. Geometry is drawn in a back to front order (known as z-buffering).
When AutoCAD was primarily a 2D system it used a 2D display list which is still what is used by 2D Wireframe. Wireframe and the other visualstyle use 3D display list techniques.
I think the confusion you are facing is with your interpretation of the 3D geometry not with its display. I suggest adding a box to the scene that would give you a frame of reference which would aid in visualizing the 3D geometry.
lee.minardi