Wouldn't the end Thinkpad cost more than a newer version?

It depends. Getting a really high-end configuration - max possible RAM, tons of storage - is either prohibitively expensive buying from Lenovo, or often outright impossible, since factory options are limited. CPUs for old machines, displays - are different All while jumping from lower midrange to higher midrange configuration may not make a lot of sense.

Since its typically old and have been used for many years, (10y+) how does it keep up?

It depends a lot on your tasks and requirements. For years, CPU performance improvements between generations were miniscule, allowing to use decade old tech just fine - as long as obvious shortcomings like slow storage, outdated wireless and poor displays are addressed. Things began to shift when Intel started supplying 6-core high TDP mobile CPUs, and the situation changed dramatically with Ryzen 4000 fast 6- and 8-core ULV becoming mainstream - old tech can't compete with that.

Security-wise, Intel CPUs remain a problem due to lack of memory encryption opening doors to all kinds of nasty. I personally would not touch anything Intel older than 10th Gen due to unfixable Intel CSME vulnerability, but 99.9% users don't care about things like that.