You can use stairs, ladders or holes to go up or down a floor. Floor 0 is the floor you stand on normally, under 0 are mostly caves and above 0 are mostly buildings.
On some places in tibia floors are used to create a illusion. For example in the Ghostlands where you have several places where you see a ghost or a human, but when you come close they dissappear or turn into something else. The trick is that the ghost or human is actually on a higher floor, but when you come close you 'll see what's on your own floor.