What you get for $1,000 vs $200? At best you might get a better screen, more storage, RAM, better chips, better camera and better software support.
I say "at best" because these things still vary. You won't get all of those for $200, but there are budget phones that will match or better at least some of the high-price phones on some of these things, e.g. a mid-range Nokia will get faster software updates than a Samsung flagship (let's not talk about LG when it comes to speed of updates), while the Pocophone F1 will give you the same chips as a Pixel 3 or a (US) Galaxy Note 9 for 1/3 of the price. But as a general rule you'll get a shorter period of software support with a cheap phone, they won't have put as much work into the camera software (more important than the hardware with current smartphones), you'll have less storage, etc.
Now whether the differences are worth $1000 is a different matter. Unless you are locked into iOS, in which case you don't have much choice, I suspect that anyone could find a $500 phone that would do everything they wanted almost as well, and most could find a $200 one that would do everything they actually need (need vs want is an important distinction: you won't get the camera and the software support of a Pixel for $200, but do you actually need them?). My own take is that while I can afford the current flagship prices I don't feel that they are justified for a phone, and so if they are still playing this game in a couple of years (2-4 years being when I next expect to replace my phone) then I'll see what the other options are.
(Of course what many people want is what they've been told by the marketing that they should want. But if they don't realise that that's not a good enough reason then they are going to be taken for a sucker in everything they do).
