The vehicles are divided into so-called tiers. The division is based on the perceived strength of a model - it starts at tier 1 and has a current cap of tier 10. Usually, the division isn't as exact, though. Machines usually talk about "low", "mid", and "high" tier. Other names for tiers are "ranks" or just "tech".
usually produce low tier vehicles, as these require only rudimentary tech and parts. There are exceptions, however.
Tiers can only be seen as a rough guideline - obviously an individual's strength may vary greatly based on the actually equipped parts and personal skill. They aren't set in stone either - they are often hotly debated and constantly adjusted among authorities.
To advance up the tier ladder is usually a tank's greater goal in life. Reaching the top means less danger, as there is no advantage in being easy prey for higher tiers. To achieve this goal, updates are performed by workshops and TRVs. This can mean something as simple as replacing a cannon, or a total conversion to a stronger model.
Thus, teams try to become stronger by defeating other teams and taking the parts of the dead enemies to upgrade themselves with them. This is a risky endeavour as it means defeating a stronger enemy and many fail, which is why teams often stagnate in terms of upgrading.