It just means the characters are more capable / can deal with certain situations better / moves are generally 'safer' / less punishable. To everyone who doesn't think tiers matter, think of it this way; An artisan with better tools can produce faster and more easily than an artisan of the same skill with lesser tools. In the game sense, if Paul has only one move that's unsafe on block, he will get punished less often than Dragunov if all of Dragunov's moves are unsafe. Similarly, if Feng can do 50% damage every time he connects with a launcher while Lili can only do 30%, it gives the Feng player the advantage. He need to flock up 3 or more times per round to lose, where the Lili player needs to flock up only twice. You could then say Paul and Feng are in a 'higher tier' than Dragunov and Lili. In those example cases, amongst equally skilled players, the higher tier characters will win out.