The biggest two drawbacks of cheaper guitars is often in the use of cheaper hardware (tuners, pickups, pots etc.) where applicable, and the lack of time spent on setup. The price points on many of them just doesn't allow for it.
Flat, polished, detailed fret work, careful action and intonation setup for example, require hours of fairly skilled labor to achieve. That adds to a price the market doesn't really support on the economy end.
On the other hand, some pricy models are overpriced IMO for cosmetic or egotistical and elitist reasons. Often without justification.
There are quite a few inexpensive guitars that can be transformed into nice playing and sounding instruments with a careful setup and upgraded strings.
And in the end, the player is still the most critical component IMO.