On an invitation, "black tie optional" means that men at the party may wear black tuxedos but are not required to. However, in many less formal settings, "black tie optional" is used as a shorthand way of suggesting guests dress in a "business casual" fashion.
In formal settings, "black tie" means wearing full black tuxedos for men and formal dresses for women. Many high-class parties require or strongly recommend this attire. When a party is designated as "black tie optional," less formal attire is also acceptable, although it should still be quite elegant. For example, a full black suit with a matching tie and shoes is also acceptable; a tuxedo that is not black is also appropriate.
Other parties are "black tie creative," which invites a bit more flexibility within a formal dress code. Often, this means wearing a traditional black tuxedo but swapping out portions of the outfit. For example, a black tuxedo with a black dress shirt is a creative form of black tie attire.
The term "black tie" is sometimes used more informally to suggest that guests dress nicely without necessarily requiring tuxedos. For example, inviting guests to a black tie birthday party tells them they should get at least a little dressed up.