A letter is marked yellow only as many times as the answer still contains it. Right-place letters are marked first, so EERIE against THEME has one yellow E.
Green letters are marked first. Each remaining letter is then marked yellow only while the answer has a copy of it that has not yet been matched, and grey after that.
Example
If the word is THEME and you guess EERIE, the last E is green because it is in the right place. The first E is yellow because THEME has another E elsewhere, and the second E is grey because there is no third. R and I are grey.
Read more about the colours in what the colours mean, or the Daily Word tips for how to use repeated letters.