What makes a guitar worth 10 times more?

Recently I started playing the guitar again, actually taking a class at my local community college. It's a classical guitar class, and traditional guitars are similar but use steel strings to the nylon of a classical guitar. So I went to Musician's Friend and ordered a cheap classical guitar for $100. Hasn't been delivered yet but for $100 doesn't look bad, decent reviews and for me and my skill will be perfect to use over the class into summer.

After looking at this guitar for $100, I saw some others twice as much and more. Now I'm wondering, just how much more can those guitars really be worth? Say, is the guitar for a $1000, 10 times better playing? Here's an example.

The Squier Affinity Series Telecaster sells for $160

The Fender Vintage Hot Rod Telecaster sells for $1600

Now the two guitars here look very similar but they are different in the details. One is made in the USA while the other is made in a foreign country. Also the other details such as craftsmanship, electronics, etc.

The main question would you pay 10 times the amount of the cheaper guitar for the better quality guitar? Will it sound 10 times better?

For me I think I wouldn't spend that kind of money but for a professional player I could see where he or she would need the better instrument. Just starting out minor defects with a guitar honestly are not noticed but for someone who plays hours per day, I'm sure they would stand out.

As I read on a forum about guitars, if you can tell the difference, then why waste your money buying the more expensive version?