Why are ISPs arranged in hierarchies? ISPs are organised in a hierarchy where the Tier 3 ISPs are connected to Tier 2, and Tier 2 ISPs are connected to Tier 1 ISPs. Why are they organised in a hierarchy? Is it because if all devices were connected directly to each other, then the structure doesn't scale and becomes inefficient? PS - I wasn't sure on which stack website to post this question, and this seemed like the best fit. However, if there is a website where this would be a better fit, please comment.

There's not really a hierarchy. It's really more of a web. There are national (or international) ISPs that connect to a large number of other ISPs. There are smaller ISPs that connect to only a few other ISPs. Then there are large companies that have their own backbone (Google, Microsoft, Amazon, Facebook, etc).

There's no "rule" about who can connect to whom. Small ISPs do not have a national or international presence, so at some point they need to connect to larger ones to have world-wide connectivity. But they also can connect to other small ISPs. ISPs negotiate connectivity with each other as their business needs require. Since it costs money to "peer" with another ISP, each one tries to get the most connectivity for the least cost. The "Tier" designation is kind of arbitrary.