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Tool & Weapon Tiers are how 7 Days to Die categorizes items from weaker materials/effects to stronger materials/effects. For example the Primitive Bow and Compound Bow are different tiers for the same weapon. Within a tier, you may encounter tools & weapons of different Quality which further stratify the range of items available. In general, a higher-tier item of any quality is likely (though not certain) to have better base stats than a lower-tier item. Note, however, that a Quality 6 Primitive Bow (for example) will allow four Mods to be attached, which might increase its stats enough to make it more damaging than a Quality 1 Compound Bow.