I face a similar issue, and I think there's three things at work:
a) The media/chat around low level Elos being total garbage/newbs is false. These are still players who play regular chess, watch chess videos, do puzzles daily, do lessons and so on. These are not total beginners.
b) We are generally underestimating just how much range there is in chess ability. A 1200 is much, much better than a 600-700 player. Even an 800 is going to be noticeably better than a 500. A +- 200 difference is actually quite large in terms of ability.
c) We are underestimating just how much we suck at chess. At 700 we don't even know what we don't know and don't even perceive just how often we blunder, move inaccurately, hang pieces, get bad positions and so on. We think we're playing ok, but we aren't.
Of course, it might also be other things, but that's plenty enough as it is.
What's with some of these players in my level playing so well? I'm under elo 400, anyone I play who is 400-500 is hard as H3LL. Playing with 0 blunders in their end at times. I thought elo 900 and below were people making blinders EVERY OTHER MOVE? I got people here playing all kinds of crazy openings. Every counter to the Italian ect. Why does everyone say people elo 300-400 don't even know how the pieces move? I got so mad one game I threw a container at my wall trying to figure out how my opponent kept finding outs on every move. One guy I beat but he was HARD AS FK. I had to stop and think while this guy had immediate moves every time without him hardly pausing all while he his getting bonus time on his clock. I'm playing 15 min games. I feel like I'm in try hard sweat call of duty lobbies. I can understand people higher level being hard but I'm here playing 600 game and vs people who are low level. I practice tactics and play 7-10 games a day. I do better when I slow down and think, however when I DON'T blunder in a game I can still get outplayed at times!! I'm frustrated.