Tier 1 Workbench is a low tier workbench that can craft you lots of tier 1 items such as the waterpipe shotgun. Basically the starter work bench.

The tier 2 is a workbench made after the tier 1 the tier 2 workbench can make a variety of items. In tier two you can make most of the guns in the game.

Tier 3 the last tier workbench. This workbench is used to make the best armor in the game, best weapons such as the Ak-47 and Mp5a4 and to craft rockets/c4 to raid other online players for there loot. There is more important stuff on tier 3 but I listed are the most important ones.