Yes they are "second tier" phones. The world is buying 2nd tier phones and even the average selling price for Samsung phones is around $182 (http://www.businessinsider.com/apple-and-samsung-sell-phones...). In the grand scheme of things, an insignificant number of people are buying high end Android phones.
At $200, the 1-2 generations behind used iPhone is very competitive with the slower, cheaper Android phones that you can buy new.
The phones you're comparing the iPhone to are second-tier phones. But, as I said in my original comment, second-tier iPhones are resale, not new.