Preselection at my university seems to be slightly different. Here, two of the applicants are "preselected" and they are more or less guaranteed one of the DAAD research fellowships (although the final decision is still made elsewhere). These candidates, in effect, seem to be fast-tracked through the process to approval and receipt of the award. Other applicants who are not "preselected" here are forwarded to DAAD, where their applications are considered. Our DAAD program coordinator told me that they received 8 applications last year, two were preselected here and a further two were selected further along in the process. As I understand it, however, the preselected applicants did not hear back from the DAAD committee any sooner in the process.