How does a University tackle admissions for Master's Degree from students that come from a different college?
There is probably a small overall effect. But most universities are interested in diversity, and many universities encourage their students to move on after graduation. The reason is that, if the faculty in a (sub) field is small, then you will benefit from wider exposure to ideas. You may have learned about as much as you can from a given faculty. 

Some places will have strict rules that every applicant is to be treated similarly. 

But the effect that I suspect is there is that some students develop a research association with a faculty member or group and there is reluctance on both sides to break it. Those students may have an advantage in continuing due to the letters of recommendation etc. that they bring. 

But there are forces pulling both ways. And you need to do well, in any case, to take advantage of any asymmetry. 

Students, on the other hand, often want to continue at the same institution. There may be geographical associations and a feeling of comfort. "BA, MA, PhD, University of Michigan" is a pretty common sort of thing to see.