I am of both worlds...
Most of my guitars-
Westone Thunder 1A,
Westone Spectrum SX, Squire Standard Strat, Seagull S6-Folk and S6-Dreadnaught, Arbor 12-string, etc- sold for well less than a grand, new, and cost me even less, as I bought all of those used. Even the Epiphone LP was used and never cost $1000- that being the one I put Burstbucker Pro Alneco 5's (whew! What a name!) in, and it sings- and still cost me far less than half a grand.
But I do own two guitars that sold, new, for $1000 or more- a MIA Fender Standard Strat, and a Martin D-16SPD. The Fender I bought used, and paid less than $1000; the Martin, new, and it cost much more than the $1000 point of demarcation.
If I just grab either the Martin or the Seagull, or the Fender or the Squier, and start playing willy-nilly (or is that wet willy?) I can not tell any difference- but if I settle into my playing, small, subtle differences emerge, in both tone and playability.
So, yes, there are differences, subtle but real. When you spend more, you experience:
1. Better tone.
2. Easier playability.
3. That elusive, hard-to-describe quality that comes simply from
playing a better instrument. Yeah, I can hear you now: "That's not real, it's perceived!" Trust me, buddy, it's real, and besides, what is reality, except what we perceive it to be?
Now, are the improvements or betterments worth the price? Almost certainly, no- you have probably moved past the point of diminishing returns- but man, oh, MAN, playing the better guitars sure is sweet!
Certainly, when playing live, especially on stage with a full band/touring/subjecting a guitar to all the vagrities of life on the road, and playing to people in either a huge arena or a smoky bar- people who are far more interested in a fun evening than the tone quest- the only real advantage is the name recognition the name on the headstock gives you. Now, THAT is perhaps the best argument for owning a Chinese counterfeit (as long as it is one of the better ones to come off the line) that was ever made- you need'nt worry so much about your axe(s) getting stolen or broken.
Oh, and having played both a Squier and a MIA Strat, both standards, both lefty, both with modern tremolo bridges, both upgraded to Texas Specials- essentially as close to the same guitar as they can be yet still be near the opposite of Fender's price range- I can say, with some authority, that although everything else matttheaxe says is certainly true, he is
way off base saying that
Mind you, there is a BIG difference between a Squire Strat's tone and an American Strat...
Rather, his last statement (edited only for clarity) applies to Squiers, MIM and MIA Strats as much as it does to Les Pauls:
If I was rich, I just rather have a real American (fill in the blank*), but my recordings sound every bit as good and mine's still quite the looker.
* Feel free to fill the blank with any of these: Les Paul, Strat, Tele, beer, woman. Yes, American Woman- and I don't care WHAT Burton Cumming, or his pale imitator Lenny Kravitz, says. And don't EVEN get me started on Randy Bachman's Hollywood Christianity/Mormonism!