Well a 3 tier system usually employs the force of gravity to transfer liquid from one vessel to another as opposed to pumps, although using pumps would be fine on a 3 tier.
Simply......
You would have your Hot Liquor Tank on the highest tier, your Mash Lauter Tun on the middle tier, and your kettle on the lowest tier. You just use the force of gravity to have your Sparge water flow down into your mash tun, and then from your mash tun into your kettle.
Now you can get very elaborate with your setup. Play around with a design, based around what kind of equipment you want to use and what processes you want. If you were to batch sparge, I think you could get away with a 2 tier setup.
As far as which one is best? This is largely a matter of personal preference. The best one is the one that works best for you. It all depends on what you like, and how you plan on brewing.