Tiered link building is the process of using different tiers of backlinks for black hat SEO purposes. The goal is to try to give some PR or link juice to websites or pages especially created to host backlinks pointing to the money site, aka tier 1 backlinks. It aims also to protect the money site from potential sanctions with Google’s Penguin.
Most often tiered linking is based upon 2 or 3 tiers. In a tiered link building scheme, the higher the rank is, the lower is the quality of the backlinks.
An example of a 3 tiers link building project:
Tier 1 - Original and manual Content
Tier 2 - Spun Content - Social bookmarks - etc.
Tier 3 - Link blasts
A visual example of tiered linking:
Image credit Dominateseo.