There's two types of tightness:
One refers to the guitar sound's low end, as most have explained here.
The other refers to the playing, i.e. playing very precise and accurate, in perfect timing. You can say for example, "the band's rhythms were really tight" after a Blues concert, meaning they really played and meshed well together, or "we try to get all rhythm tracks as tight as possible in the studio", meaning you try to play them as accurate and in time as possible.
