Draft order is currently (FB Mog 18 v15.0.8) done based upon a teams record. Only the teams with the worst records and the Superbowl winner and loser are in their correct draft order.

In the NFL:

Teams that do not make the playoffs get their draft position based upon their record. Even if their record is better than a team that made the playoffs, non-playoff teams ALWAYS draft before playoff teams. In other words, an 10-6 team that does not make the playoffs drafts before an 8-8 team that does make the playoffs.

All playoff teams draft after non-playoff teams based upon the round in which they are eliminated. Teams eliminated in the Wild Card games draft before teams eliminated in the Division games who draft before teams eliminated in the Conference games who draft before the teams who play in the Superbowl. Within each elimination group, the record is used to determine the draft order.

There are additional tie-breakers when the records are identical.