Hi @rajat.chutani,
Welcome to using AppD and thanks for posting your first question.
I pulled this information out of our AppD Documentation. I hope it helps.
Nodes
A node in the AppDynamics model corresponds to a monitored server or JVM in the application environment. A node is the smallest unit of the modeled environment. Depending on the agent type, a node may correspond to an individual application server, JVM, CLR, PHP application, Apache Web server.
Each node identifies itself in the AppDynamics model. When you configure the agent, you specify the name of the node, tier, and business application under which the agent reports data to the Controller.
Tiers
A tier is a unit in the AppDynamics model composed of a grouping of one or more nodes. How you organize tiers depends on the conceptual model of your environment.
Often a tier is used to a group of a set of identical, redundant servers. But that is not strictly required. You can group any set of nodes, identical or not, for which you want performance metrics to be treated as a unit into a single tier.
The single restriction is that all nodes in a single tier must be the same type. That is, a tier cannot have mixed types of agents, such as both .NET and Java nodes.
The traffic in a business application flows between tiers, as indicated by lines on the flow map, which are annotated with performance metrics.
In the AppDynamics model:
There is no interaction among nodes within a single tier
An application agent node cannot belong to more than one tier ^ Updated post with updated links to Docs
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