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Upgrade Tier is the amount of upgrades for a specific tower's upgrade path. Upgrade Tier is referred numerically, typically in the "Tier X" format (where X is a number). Upgrade tiers were first introduced in Bloons TD 3.
In Bloons TD 5 Generation games, each tower has 4 tiers for each upgrade path. Up to Tier 2 can be applied to both paths, with one path going up to Tier 4.
In Bloons TD 6 Generation games, each tower has 5 tiers for each upgrade path. Up to Tier 2 can be applied to 2 paths, with one path going up to Tier 5. Tier 5 Upgrades have special rules when upgrading, having a limit of one of the same Tier 5 upgrade (with exception of Crossbow Master with 
Master Double Cross). The final tier is Paragons, which require all Tier 5 upgrades of the same tower type to activate.