Is the following sentence an example of euphemism? "Prince's band is tighter than a Marine Corps top sheet."
No, this is not an example of a euphemism. It is, instead, an example of a simile.
A euphemism is a word or a phrase that we use so that we do not have to come right out and say something that is typically not spoken about in polite society. So, for example, it is a euphemism to say that someone “passed away” instead of saying that they died. We commonly say that two people are “sleeping together” as a euphemism if they are in a sexual relationship. These euphemisms allow us to avoid saying things that are not socially acceptable.
In the sentence you give, there is nothing unacceptable about saying that Prince’s band is tight (presumably meaning that they are well-coordinated in their playing). Therefore, this is not a euphemism.
Instead, it is a simile. It is comparing one thing to another (using the word “like”) to emphasize some quality of that thing. Marines have a reputation for strict discipline. They are said to require sheets in barracks to be stretched so tightly on beds that a quarter will bounce if dropped on the sheet. This is why this sentence works as a simile.
So, this is not a euphemism, it is a simile.