As with everything else in this world, you get what you pay for. You can absolutely get basic, cheap web hosting for a lot less money. If your site only has a couple dozen visitors per day, then you should probably use that cheap hosting, as you won’t stand to benefit much from managed hosting.
However, if your site is large (or it will be), then it will quickly begin to get very slow on a cheap host. The reason you can get hosting for $5 is because your site is hosted on a server sharing resources with hundreds, or even thousands of other web sites. If there are more than a few people using your site at once, it will either slow to a crawl, or will go down entirely, depending on your host. It’s also worth mentioning that the concept of “unlimited” doesn’t really exist with these hosts. If your site is using too many resources, they will shut your site down.
With managed hosting, your site essentially has its own dedicated server. You won’t be fighting for resources with other sites, and you can handle more traffic. Additionally, with managed hosting, I optimize the server and your web site to make things even faster, and increase the number of concurrent visitors your site can handle, thanks to specialized caching techniques and NGINX server optimization. This just simply isn’t possible with other hosts.
Of course, setting this up and maintaining it takes a lot of time, and even more knowledge. You’re not just paying for the hosting, you’re paying for a server administrator to stay on top of things like performance and security updates, as well as managing WordPress for you.