That's just from a quick look at Amazon - I'm sure you could find something cheaper and with better specs with a bit of effort.
And yeah, it's probably a bit crap. And there's good odds that it'll be dead or broken or unsupported in a couple of years - although you could throw it away, buy a second one and still be cheaper than the Kindle was.
I certainly wouldn't buy one, and in the long run you may regret doing so. But it looks shinier than a Kindle, it has colour, it's far more responsive, and it has far more functionality. So when you stick the two side-by-side, the Kindle looks pretty overpriced by comparison. Just like how graphical calculators look horribly overpriced when you stick them next to a dirt cheap Android tablet that has 100x the functionality they do for less.
The biggest thing I've experienced with cheap tablets is that the underlying storage medium of the device just sucks, and there's often no good way to actually know how bad it'll be when just looking at a spec list. Auto-updates from the Google Play store of the apps will quickly wear out the on-board storage and lead to everything going extremely slow until it finally dies.
Also, usually they have extremely bad screens with terrible viewing angles. Using them as something you're going to stare at for hours is miserable. Sure, the spec list says it's a higher resolution than the paper-like e-reader, but in practice the paper like display is far more comfortable to stare at for long periods of time.
Spec lists don't tell the whole story.