I always looked at this phenomena like a pyramid. How many high school seniors are there in a given year? What percentage of those can play varsity basketball? What percentage of those can play college basketball at any level? What percentage of those can play pro basketball at any level? That large initial base of the population whittles down to the head of a pin at the top.
To provide a first hand account, in college (DIII basketball) we went down the road to scrimmage Army (low-level DI) before our season started. It was eye-opening how different the talent and skill levels were, even within that relevant tier I mentioned above. Army had a kid who was also an all-American tight end on the football team. He was an absolute beast.