Peformance of Azure databases is expressed in terms of DTUS which means the number of transactions that can be completed per second.Further it also limits the max amount of memory,cpu,IO your database will get..please see below table for more details and pay attention to session requests section..
I hope the above image clarifies on differences between different database tiers.further below is what Azure Documentation has to say when to use different database tiers..
Whenever you want to estimate performance of Azure database,you will want to check below DMVS which gives more details on DTU usage expressed in terms of IO,log,Memory,CPU..
--This DMV contains data for only hour,but captured every 15 seconds
AVG(avg_cpu_percent) AS 'Average CPU Utilization In Percent',
MAX(avg_cpu_percent) AS 'Maximum CPU Utilization In Percent',
AVG(avg_data_io_percent) AS 'Average Data IO In Percent',
MAX(avg_data_io_percent) AS 'Maximum Data IO In Percent',
AVG(avg_log_write_percent) AS 'Average Log Write Utilization In Percent',
MAX(avg_log_write_percent) AS 'Maximum Log Write Utilization In Percent',
AVG(avg_memory_usage_percent) AS 'Average Memory Usage In Percent',
MAX(avg_memory_usage_percent) AS 'Maximum Memory Usage In Percent'
--This DMV contains data for 14 days with capturing interval of 5 minutes
SELECT start_time, end_time,
FROM (VALUES (avg_cpu_percent), (avg_physical_data_read_percent), (avg_log_write_percent)) AS value(v)) AS [avg_DTU_percent]
WHERE database_name = '<your db name>'
ORDER BY end_time DESC;
Whenever you see a DTU metric consistently at 90%,it is an indicator of bottle neck and it can be troubleshooted the same way,we troubleshoot our on prem servers..
Say for example,you are seeing CPU consistently at 90% for a period of time from the data captured through DMV,you can start with gathering queries which are causing high CPU,see if they can be tuned to consume less cpu..When all your tuning efforts are exhausted,then you may need to definitely upgrade to higher level Tier