>_>
DON'T READ THE WORDS BELOW IF YOU DON'T CARE ABOUT TIERS. THEY WON'T REALLY MATTER TO YOU.
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Tiers are compiled as a combination of popularity and how frequently the character wins in tournaments that sufficiently represent the competitive environment as a whole. Tier position is also influenced by predictions of the character's evolution of metagame.
For instance, Falco may not necessarily be the second best character in Melee, but he showed up a lot in tournaments and generally placed very high. Also, the tiers may have shifted over time since the tierlist was last made (summer of '06). For example, let's take MELEE-FC Diamond.
1st - Mew2King (Marth)
2nd - PC Chris (Falco/Fox)
3rd - Chu Dat (Ice Climbers)
4th - Drephen (Sheik)
5th - Vidjo (Peach)
5th - Taj (Marth/Mewtwo)
7th - DaShizWiz (Falco)
7th - Darkrain (Captain Falcon)
And *pound* 3, the last major Melee tournament.
1. Mango (Jigglypuff)
2. Mew2king (Marth)
3. PC Chris (Fox)
4. Cort (Peach)
5. Chu Dat (Ice Climbers)
5. Vidjogamer (Peach)
7. Azen (Marth)
7. Darkrain (Captain Falcon)
What's this? No Falco in the top 8? The closest was Forward, who placed 9th. And Mango won with Jigglypuff. So, yeah. Tier lists have for the most part been more of a guideline to which characters have seen more success and would possibly have more potential of winning. In Brawl, it might very well be separated into a "Top Tier" and a "Won't Win Tier," unfortunately, but that remains to be seen.
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tl;dr ver. tiers are kinda like a character ranking, but not really.