The opcode (operation code) is the part of an instruction that names the operation: load, add, jump and so on. The control unit decodes it to decide which steps and control signals the instruction needs.
In Tiny8 the opcode is the top 4 bits, IR[7:4], which is the left hex digit:
0HALT,1LOAD,2STORE,3ADD,4SUB,5JMP,6JZ;7toFare unused.
A 4-to-16 decoder turns the opcode into one line per instruction.
Sizing rule: with n opcode bits there are 2ⁿ possible codes. To support k instructions you need the smallest n with 2ⁿ ≥ k, rounding up. Tiny8's 7 instructions would fit in 3 bits; it uses 4, which leaves room for nine more.
Unused opcodes are useful when designing the decode logic: they never occur, so they're don't-cares. But if you later give one a meaning, any logic that relied on it as a don't-care must be rechecked.