The simple explanation ...
Okay ... time for another dissertation ...
Part 1 ...
Monitors (studio speakers) are designed to have a very flat frequency response. What this means is that if you playback a sine-wave sweep through the speakers and record the result (under ideal circumstances of course in an acoustically treated anechoic booth), the amplitude of the resultant recording should be VERY flat (literally a flat line on a graph) all the way from 20-20,000Hz. Of course, NO speaker in the world is COMPLETELY flat from 20-20Khz, but in general, studio reference monitors --especially near-field monitors, which are most common -- are designed to have a flat response (within +/-3.0dB) from around 80Hz (even lower with bigger monitors) right up to 20,000Hz (the highest audible frequency).
What this means to you is that the speaker won't colour the sound in either a good or a bad way. Most home systems hype the bass or the treble to excess, and as a result, any mixes you do on this type of set-up will most likely sound like garbage on any other playback medium. Also, the shape and size of your mixing environment, as well as the proximity of the speakers to walls/doors/windows has a profound impact on frequency response.
Bass frequencies mostly are affected by reflective surfaces, and you'll find that many studios are acoustically treated with "bass-traps" to compensate. This is why you'll find a lot of PA (club) sub-woofers in large sub-boxes, as this enhances the volume of the bass frequencies these speakers reproduce. In simple terms:
Bass frequencies, having a longer wavelength than treble frequencies, are almost entirely imperceptible in any directional context to the human ear. (This is why you'll often find sub-woofers in the trunks of cars). As these frequencies bounce, they produce early-reflections and slap-back, as you're actually hearing both the bass from the cone, and the bass that bounced off of the enclosure. As a result, you're hearing the bass MUCH louder than you would if it was only coming from the cone. Understand? It's like an echo for low frequencies, but since we can't tell what direction things are coming from, it ends up sounding just ... well ... LOUDER.
A general rule is that the further from a wall you place your speakers, the more accurate your bass response will be. If you place your speakers in a corner, the bass will be sound far louder than it actually is. Some monitors (like Genelecs and Mackies even) have a variable low-cut filter built in to the speaker to compensate, with different settings for "Against the Wall", "In A Corner", and "Normal", the last of which has no filtering at all, for when you have your speakers 6-8 feet from any adjacent walls.
Part 2 ...
Monitors are pricey because of the strict design and manufacturing requirements necessary to ensure an even response for EVERY single speaker that comes off of the production line. Often companies will ship speakers as "matched pairs", those being speakers that have been tested to have only minute variances in amplitude, so stereo image is exceptionally crisp and clear.
NS-10's (the Yamaha monitors) are the industry standard because they DO have such a flat response, and engineers can go from studio to studio and listen to the same speakers, trusting that the resulting mix will sound decent on a large variety of speakers. Unfortunately, the NS-10's don't SOUND all that great to my ears. Sure, they're flat, but I find I get ear fatigue from mixing too long with them. Incidentally, you'll find that every engineer will have a favourite monitor set-up, just like everyone has a favourite colour.
All well and good, you say, but what the hell has any of this got to do with me?
Well, not that much, actually. You can mix on any system, and your mixes can sound good on any system, provided you know the inherent tone your speakers impart on your mix. I used to mix on a couple of computer speakers way back in the day, and my first mixes sounded awful. Over time, though, I learned what a GOOD mix sounded like on my system, and I was able to tailor my mixes to make up for the inadequacies of my monitors.
This is why you will almost NEVER change your monitoring set-up once you find something you like. Otherwise, your mixes will sound different month to month, even if you use the exact same techniques. If you don't KNOW the sound of your speakers, your mixes won't be all that spectacular, regardless of how much experience in mixing you have.
So what's the difference between the cheap monitors and the ridiculously expensive monitors? Well, manufacturing, components and frequency response are all factors. But the most important factor is: Do they sound good to YOU?
Get speakers that sound good to you and fit your budget, then LEARN to mix on them. You'll have to learn to mix on the more expensive speakers anyway, so why not save some money when you first start out? Get a couple of CDs that you're familiar with (and like the sound of) and take them down to your local music shop and play them through a couple of sets of monitors (if possible).
Good luck, and happy mixing!
-=(stu.macQ)=-
P.S. The Yamaha NS-10's are no longer available, as they can't get the supply of wood pulp they made the drivers out of anymore. You'll have to find them second-hand, first-hand only if you're lucky.