Octane rating, is the resistance to burning of a particular fuel. The higher the compression in an engine, the more likely the fuel is to get hot enough to combust before the spark plug ignites. So in high compression engines, higher octane is needed to prevent detonation or knock, which can destroy pistons and valves. If you were to put 114 octane race gas in your sister's camry, it would most likely run very bad if it would run at all, because it takes a bigger spark to ignite the high octane fuel.
The reason people say not to buy higher octane than you need is because the component that is octane, takes up volume that could be the fuel itself. Basically your replacing fuel with octane, the higher the rating is. Plus you're losing money because it costs more at the pumps. Octane boosters are bought and sold because people think it will help them get better gas mileage or more power, when in reality it does absolutely nothing for a normal engine.