Tier refers to the armor sets from raid dungeons. Typically each new content patch/expansion that has a higher difficulty raid included has items with the next "tier" of stats and the latest and greatest class armor sets. Some of them also have versions with slightly lesser stats from looking-for-raid level raids and some pieces can be bought with valor points.
Older tiers can for the most part still be gotten, either from their respective raids as drops or from the older token merchants, but they are considerably worse than the current top tier stuff. Lots of people go back to get them just for how they look.
I don't know what the current tier is, as I haven't personally played in a long time.