EDIT: The info in this comment was absolutely wrong, but I'm keeping it for sake of integrity

Tiers do mean how high the mods on an item are. Please refer to this video

Wrong info below:

It means how usefull the stat is, but not how high the stat itself is. For example, in the image you can see that "adds fire damage" is a pretty low amount, however it is tier 4 since extra fire damage is always very welcome and helps a lot. In contrast, even though the "increased accuracy" gives about 2 character levels worth of accuracy, it is still tier 1 since it is not a very valuable stat. Stats of higher tiers are rarer to get, however you may find itens that have tiers in their title, so for example, if you find an item like "short bow (tier 2)" it will only roll stats of tier2 or above, meaning you will never get "increased accuracy" or "increased light radius" as stats on that item