I see certain towns, in my case more specifically Divinity's Reach have 'Cultural Armor Merchants'. Each one of these merchants has a tier which as I understand tiers with levels. What is the significance of this armor vs. other armor that you can find? Also, why is this armor separated by race? Is it strictly appearance?
Cultural armor is indeed different for each race. The differences aren't just cosmetic, as each race's set of armor has different set bonuses.
The armor is roughly analogous to Prestige Armor from Guild Wars 1, though that armor was entirely cosmetic. Because of its higher cost, it's a way to reward players who have had the time/resources/money to acquire that much gold to afford the items.
As of this moment, because it's so early in release and the Trading Post is still disabled, it's difficult to know exactly how this armor compares, stats-wise, to the crafted Legendary sets in the game, though it is almost certainly better than the random mob drops.
Cultural armour are armour for your specific race. No other race can buy it. It's some sort of distinctive set. You can be a proud
For example, the Norn have sellers in the great lodge that sell these.
They come in three tiers, with each type (light, medium, heavy) per tiers. First one can be wear at level 35. Furthermore, they are gold armours :P