Power Mod is multiplier that affects the Bow's Power Stat. 1 does nothing. 1.1 increases Power by 10%, 0.9 decreases Power by 10%. This allows either Long Distance arrows to actually have longer distance that varies across each bow. Better Hunting Arrows have longer range as well. Either Piercing arrows have shorter range.
A Yew longbow at 77 Power would have 85 power with either Long Distance arrows or Better Hunting arrows, but only 69 Power with either Piercing arrows.
Better Piercing Arrows are still the strongest. Better Long Distance arrows are slightly stronger than Quality or Wounding (unless wounding can do bleed).