Tier
Tiers are an attempt by players to classify characters in a game by their competitive ability. They can be found in any game with variable characters, including Pokémon and Super Smash Bros. The existence of tiers can be controversial as skill is usually has more impact on the outcome of a match. As such, tiers should be seen as a classification of each character's competitive potential at the height of the metagame.
Tiers in Pokémon
Pokémon features hundreds of characters available for use, all varying in their base statistics and moveset potential. There are currently six tiers with various fansites individually deciding the Pokémon assumed to be in those tiers, most notably Smogon. The Pokémon tier list has received much criticism, because there is no "official" tier list for Pokémon.
Most battles are conducted using every tier except Uber. However, it is common for some battles to maintain use in one tier only. Usually Under-Used only, or Never-Used only.
Uber
The Uber tier is not designed to be balanced, its purpose is to be a banlist for OU and the other tiers, however this does not mean it is not, or cannot be played. Pokémon in the Uber tier are deemed too powerful or centralizing to be used fairly among other Pokémon. A common misconception, especially among players new to competitive battling, is that Uber tier contains all, or only, legendary Pokémon. While it is true that a vast majority of the accepted Ubers are indeed legendary, several are not and many legendary Pokemon are far from being Uber.
While most Pokémon in the Uber tier are there for their ability to power through teams or be defensive behemoths, Wobbuffet is included primarily because of its Shadow Tag ability, Counter and Mirror Coat which let it reflect most moves back, and Tickle+Encore which allows Wobbuffet to bring a slow Pokemon using a setup move down to -6 Defense with almost no risk, ready for a Pursuit user to switch in and KO. Wobbuffet's pre-evolution, Wynaut, is sometimes banned for similar reasons. Garchomp is another a non-legendary that some fans consider for the list due to its high stats, brilliant movepool, and great typing.
Over-Used
Over-used, commonly abbreviated as "OU", refers to Pokémon that are most commonly seen in standard play. It is a misconception that all OU Pokémon are the most powerful in the game. OU is a term based on usage; however, there is a distinct correlation between usage and usefulness in the system.
There are exceptions to this such as Magneton in Generation III, where it was considered an OU Pokémon merely because it was used primarily as a counter for Skarmory; a Pokémon commonly seen due to its high defense, low weaknesses, and stall-based movepool. The introduction of Magnezone, an evolution of Magneton, solidified its place in OU, due to increased stats, and a broader movepool.
Examples of common OU Pokémon are the aforementioned Skarmory and Magnezone as well as Blissey and and all of the pseudo-legendaries like Tyranitar.
Borderline
Pokémon in Borderline, commonly referred to as "BL", are considered by some to be too strong for Under-Used, but may be found in some OU battles. They are classified as BL because they simply do not have the capacity to compete in solid OU consistently due mostly to stats, or poor movepools.
Examples of BL Pokémon are Raikou, Staraptor, or Froslass.
Under-Used
Under-Used, commonly referred to as "UU", designates Pokémon whose use is limited as they are not strong enough for general BL, or above, competition. Usually due to poor stats, poor movepools, or easily exploitable weaknesses. UU Pokémon are recommended by some solely for UU-type battles.
Examples of UU include Kingler, Rapidash, or Toxicroak.
Never-Used
As the name implies, Never-Used, commonly referred to as "NU", is for Pokémon that have problems competing even in UU due to dismal stats and/or movepools. This is where most novelty Pokémon reside in tiers as well as Pokémon found early in a player's journey. They are recommended by some only for use in NU only battles. However, most NU Pokémon are very common among contest coordinators.
The most notable examples are the aforementioned novelty Pokémon, like Pachirisu or Chatot, and early, easily obtained Pokémon, like Raticate or Ledian, but can also include moderately powerful Pokémon like Magcargo or Exploud.
Tier variations
Some Pokémon are not listed in tiers but are sometimes used in competitive play because they have a change during evolution that changed their disposition enough to allow them to stay competitive, even in an unevolved state. There are a few exceptions, however, such as Porygon2, which is due to its evolution, Porygon-Z having lower Defense, and Light Ball Pikachu.
Another example would be Marowak when used in battles when items are not allowed. Marowak with a Thick Club has a doubled Attack, greatly increasing its power. However, without the item, its base attack remains 80, putting it in the UU, or NU in some cases, tier.