It is used as an abstraction of technology and science. The player would "reseach" a "technology", investing some kind of currency. In a certain amount of time, it would be "discovered," and the player would have access to a new unit or unit upgrade, for example. It may (but not always,) lead to several others technologies, which may lead more techologies, giving the hierarchy. Note that is does not follow a linear path. When graphically reproduced, it looks like a tree thus giving its name.
Games that use a Technology tree: