Is this the tier structure people are talking about?

Can you tell me if this is right?

my site = my site
1st tier = spun content (very readable, possibly handwritten with help of spinner, maybe PLR, etc.)
2nd tier = spun content (looks like English Second Language of spun content)
3rd tier = (why would anyone use this)

Is the general rule that better 1st tier content sticks because you take the time to make it worthwhile, but no one can create enough 2nd tier stuff so they just run automation tools all the time to replace that being taken down.

(two questions: directory structure and then theory behind it)

Thanks for your consideration.