Is there a reason tier 1 armor is used in lieu of tier 2 armor? I have been seeing all fancy ships with tier 1 armor for some reason, is something wrong with tier 2 armor? I've googled but there is not a clear explanation.

The Deca# class ships where Xenon motherships, only a few are know. And as far as I know have those archived selfawareness... heavily armed and defended also capable to produce ships themself... they are pretty much your base in mobile with lots of weapons and armor.
And we are now lucky to call one (a non gamebreaking version of it) as our own :D
I love it XD