Tier 2 gear is higher in rating than Tier 1 gear. In the future DCUO will (hopefully) be adding better sets of armor which will be referred to as Tier 3, Tier 4, etc.
Player vs Environment
PvE T1 gear is available in the tech wing, magic wing and meta wing of the Watch Tower. For tech origin players, this set is sold by Steel. For magic origin players, this set is sold by Raven. For meta origin players, this set is sold by Flash.
Marks of Triumph are used to purchase PvE T1 gear and are earned by playing duos and hard alerts. Players are rewarded 2 marks of triumph per duo and 4-6 per hard alert.
PvE T2 gear is available in the tech wing, magic wing and meta wing of the Watch Tower. For tech origin players, this set is sold by Batgirl. For magic origin players, this set is sold by Wonder Girl. For meta origin players, this set is sold by Power Girl.
Marks of Distinction are used to purchase PvE T2 gear and are earned by playing daily duos, daily hard alerts and raids. Players are rewarded 1 marks of distinction per duo, 2 per daily hard alert and 10+ per raid.
Player vs Player
PvP T1 gear is available in the reactor core, which is located in the meta wing of the Watch Tower. This is the only Tier armor set that is generic to all players regardless of origin.
Influence is used to purchase PvP T1 gear and is earned by playing arenas and legends modes. Both modes reward players with 1 influence per team kill (2 for your kills) plus an additional 25 influence per loss and 50 per win.
PvP T2 gear is available in the tech wing, magic wing and meta wing of the Watch Tower. For tech origin players, this set is sold by Robin. For magic origin players, this set is sold by Aquaman. For meta origin players, this set is sold by Hawkgirl.
Marks of Victory are used to purchase PvP T2 gear and are earned by playing arenas and legends modes. Both modes reward players with 1 mark of victory per loss and 2 per win.
Note: Top rated PvP weapons are available at the PvP Ring War Events and are also purchased with Marks of Victory. Activate the "Diamonds are for Everyone" or "Will vs Evil" mission in your journal and go to the rally point on the map. Activating either event is the only way to spawn these particular vendors. (Some armor is also available here, but I'm not sure what the ratings are like).