[2021] Can someone explain this Alva node? This explanation made me more confused.

Normally, changing an Incursion room will set its upgrade tier to 1. Contested Development will set the upgrade tier to 1 and then add the tier of the room it was changed from. So changing a tier 1 room will set the new room at tier 2 and changing a tier 2 or 3 will set the new room to tier 3.