[General Questions and Answers] Planterz:
"Makes sense" is pretty subjective. It depends on what you can afford, are willing to spend, want and/or need. I pursue the various "what phone should you buy" threads regularly, and I also regularly recommend phones like the Nexus 4, Moto G, Sony Xperia SP, and the like. I'm also a big fan of "obsolete" or discontinue phones that you can pick up on eBay or Amazon. For example, you can get the Nexus 4 off eBay, brand new, for $240. And it's a way better phone than a Moto G, for only a bit more. IMO people need to remember options like these. It doesn't have to be a new phone (newly released, as opposed to new vs used). A flagship for a year or 2 ago can be had for far less than its original cost, and can outstrip a "budget" phone that just came out. Another example: A co-worker of mine needs a cheap smartphone after switching to T-Mobile. He was looking at the LG L9 that just came out, which can be purchased outright for a mere $100. The main disadvantage is that it only has HSPA 21.1Mb/s download capability. I told him to get a new LG F6 off eBay for $109. Slightly smaller screen, but same resolution, better processor, and has LTE. He didn't know about it, because it's discontinued and not on T-Mo's website anymore.

If we're not there yet, we're close. The Moto G really sent a shockwave out, and other manufacturers are clamoring to compete (and mostly failing). A "budget" phone, as long as you pick the right one, should be able to do nearly, if not everything you want it to. And as I said above, "budget" doesn't necessarily mean a newly released phone; flagships from a couple years ago are still capable devices and can be had for very reasonable costs.

One obvious reason to have a flagship is the superior screen. Do you need a HD screen? No, you really don't. Anything above 200ppi is usable, to be frank. But of course everybody wants a better screen, since most of what we do with smartphones involves looking at them. Screen size is a subjective preference, but everybody wants the screen to be clearer, brighter, and more vibrant.

If you like to play games, flagships are obviously better. Better resolution, higher framerates,

There's always some things that have to be sacrificed to make a phone cheaper. Just look at the Moto E vs the Moto G. Screen resolution is lower and smaller, the processor is only a dual core, and the camera lacks flash (no front-facing camera either). And comparing the Moto G to the Moto X or other flagship phones, it's obviously not as powerful, doesn't have as much RAM, and the 5mp camera is constrained by the fact that it only has 5mp, where most flagships have at least double, and sometimes triple or quadruple that. Internal storage is an issue, especially if running KitKat and you're not able to move apps to SD, or the phone doesn't even have SD capability,

To conclude, let's compare to popular phones, the Moto G and the Galaxy S5. The Moto G runs smoothly, due to it's nearly-stock Android (completely stock if you get the GPE). The screen is very decent. But if you get the regular versions, you're limited to 8 or 16GB (less available to the user), 21.1Mb/s HSPA, and mediocre cameras. The LTE version is the better choice, since you also get a microSD slot, although it's only good for 32GB cards. Whereas with an S5 you get a higher resolution screen, more RAM, a far more capable processor, far better cameras, 32GB storage built-in, plus expandability to 128GB, etc, etc, etc. It also costs three times as much.

So yeah, it's great that we can buy a cheap smartphone that'll do everything we need. But that doesn't change the fact that there are phones that can do what we want.