When chip manufacturers like Intel, TSMC, UMC, GF, etc. make wafers, there are slight variations in material quality across the wafer surface, there are local variations in how the lithography, metal vapor deposition, photoresist chemical deposition, etc. are done and this can yield a significant contrast between how good the best chip of a given batch will perform vs how bad the worst chip of the same batch will perform.
To maximize profit, chip manufacturers test and sort chips based on various criteria such as leakage current, power draw at key frequencies, salvageable defects, etc. to decide which product range the chips fit best in. That's binning.
When you buy "K-chips", you are playing the lottery: you are guaranteed a chip that performs at least up to stock K-chip standard but you have absolutely no way to know beforehand how much farther beyond that your specific chip can go under any given circumstances beyond stock conditions. That's the chip lottery. Some i5/i7 3xxxK/4xxxK may max out at 4.2GHz while others may hit 5GHz. Some may require 60W@1.2V to get to a given clock rate while others may require 100W@1.35V.
What is the silicon lottery I see it all the time in the forums but I never really had a true understanding of what it means. Additionally what does "higher binned" mean?
CPUs of a particular series or model are not exactly identical. Some overclock better than others.
The lottery means you have lucked out and gotten a good one for OC. There is no way to predict until you reach the upper bounds of overclocking.