HI,
Its classification like we do in storage (Gold, Silver and brownze). As in storage there are no fixed matrix to define the classes. It will vary in customer's environment.
Here each Tier are defined based on the combination of Memory and CPU.
Tier-3 VM means a VM with 3GB memory reserved and 1 GHz of CPU
Tier-2 VM means a VM with 5 GB Memory and 2GHz CPU reserved