just looked up a camera on taobao.
prices vary over 1000 rmb for the same camera.
if someone can explain this to me, would appreciate it.

Some are official with tax(these usually have high seller ratings, but very low volume of sales).

Some are imported without being opened and shipped directly to you.

Some are the real product with no tax and manufactured in China. These usually have high ratings, and higher volume of sales.

Then others are in the gray area. The real product, but taken from the factories and sold directly by a worker or whatever.

Then there are the fakes.

Wow! That complicated, huh? Thanks for that. So how do you make your way through the taobao jungle and decide which one to go with?

Buy the one taken from the factories that the worker smuggled into his underwear to save a few hundred kuai and take a chance that it won't blow up in your face or smell bad?

Also some of the shops are real brick and mortar stores who have much higher costs than people selling direct.

then why do they bother trying to compete? who would pay a higher price for the same product that's just one screen scroll down a page?

Shops can offer things that others can't sometimes, after sales service, training, easier warranty claims (a lot of online only stores close down quickly because they only compete on price, which creates a race to the bottom scenario, unprofitable so they go under) plus they are usually people interested in the subject area so can give you buying advice plus package items that perform well together. I use real brick and mortar stores still for items such as expensive cameras/electronics for these reasons.

Some other reasons why items can be listed cheap.

Some of the electronic stuff is what would be sold as 'reconditioned' in UK. That is, it has been returned by the customer, under waranty (and repaired) or just not wanted. Because the item is not new, it cannot be sold as new, even though it is re-sealed. But TIC.

Some things are too cheap to be true. These are possibly a scam, pay your money and get nothing.
Some are stolen goods.
Some are stock clearance items (fire or bankruptcy sale)

Some are factory seconds, but sold as top quality.
Some are end of line/factory clearance.

so if you buy from a bricks and mortar place, it's safe?

otherwise, you can't quite be sure what you're getting?

Most of the time, you will probably get exactly what you asked for on taobao.

But sometimes you won't and you will find it incredibly difficult to get your money back.

Thats why for expensive stuff that I want to be sure of, I use a shop in China. In the west, I would buy online still as the legal structures still in place (and enforced) to pretty much guarantee the item. In China, if you were to get the police involved and had receipts from a local shop, it is likely something could be done if a product was found to be faulty/fake and you had problems with the owners. Most likely a cop just showing up or calling the shop would resolve the problem or at least make the shop owners suddenly more amenable to restitution/negotiation. Buying online however... good luck, it's still a little bit of the wild west online here.

Remember that the higher value an item, the more profit in faking/selling second hand as new/stealing and reselling said item. This could still happen in a shop, but at least in a shop you get to handle/check the item before purchase, see them taking a new one out of a box (so can check the box/packaging if you have any doubts) and are actually looking someone in the eye when they tell you its new.

There is some stuff I have no problems buying, the low volume sale stuff and unbranded stuff. People fake the high volume sales items first, high value second.