Something that's occupied is being used or is unavailable. If the sign on the restroom door says occupied, it means there's someone in there and you're just going to have to wait.
If every seat on the subway is occupied, you'll have to stand, and if the apartment you were hoping to rent is occupied, you'll have to start your search all over again. When you're busy with work, you're occupied — you're engaged, or distracted by it. And when a country is occupied, it's been invaded and taken over by a foreign power — this last meaning was first used during World War II, referring to German-occupied France.