it's when a new generation comes/new mons are introduced and they're stronger than the mons that were in a meta before, so the relative power level increases
as an example, take infernape in gen 4 ou, one of the most prominent threats: base 108 speed, a usually useless ability and around base 100 attacking stats
now take tapu koko in gen 7 ou: base 125 speed, attack and special attack on the level of infernape, and electric surge, which effectively gives it a free choice band/specs for electric type moves.
because of this no one uses infernape in ou anymore except for its niche scarf set. there are simply better options
hope that cleared some things up
And to add more confusion to the issue, power creep can happen for statistical reasons as well.
Imagine you are creating a simplified Pokémon game, where all Pokémon have a single stat, which is based on the throw of six dice. You take a Pokémon, throw the dice, and program the resulting stats into the game. Your Pokémon will have stats ranging from 6 to 36, with an average of 21. Using this method, you create 100 Pokémon.
Then Smogon makes a metagame out of your game, where the ten best Pokémon make it to the OU tier. Let's say those ten best have stats of 31, 31, 31, 31, 32, 32, 33, 33, 34, and 36 (
disclaimer: This is in no way representative of the actual number distribution you'd get out of dice throws, I'm just making them up).
Your game becomes a success, so you decide to make another generation of 100 more Pokémon using the same method. The range of Pokémon stats is the same, from 6 to 36, with an average of 21. But now there are twice as many Pokémon. And the ten best out of 200 are, on average, better than the ten best out of 100. So now, the top 10 best stats are 32, 32, 32, 32, 33, 33, 33, 34, 35, and 36. Stats of 31 don't cut it any more, there are more Pokémon to use in the 32-36 range.
Of course the second generation becomes a huge hit, so you keep going. 100 more Pokémon for Gen 3. The ten best Pokémon (out of 300) now have stats of 32, 32, 33, 33, 33, 33, 34, 35, 36, and 36.
Gen 4: 33, 33, 33, 34, 34, 34, 35, 35, 36, and 36.
Gen 5: 33, 34, 34, 34, 34, 35, 35, 36, 36, and 36.
Gen 6: 34, 34, 35, 35, 35, 35, 36, 36, 36, and 36.
Gen 7: 35, 35, 35, 35, 36, 36, 36, 36, 36, and 36.
In Gen 7, only Pokémon with stats of 35 and 36 make it to OU. Maybe UU comprises the next 20 Pokémon on the list, all with base stats in the 32-34 range - stronger than Gen I OU on average. Nothing changed in terms of stats, but there are simply more Pokémon to pick the top 10 out from, and on average they will have higher and higher stats the bigger the total pool becomes.
Of course, the real Pokémon games have introduced a number of other factors contributing to the overall power creep as well (for instance, giving boosts even to old and weaker Pokémon, raising the bottom power level as well as the top level, which invariably affects the average), but the same principle is at work there too. As the number of Pokémon grows, even within the same design parameters, there will be more Pokémon in the upper echelons of power, and the tiers' size stays relatively constant - meaning that each tier will get stronger Pokémon for every passing generation.