There have been plenty of low budget games.
Not even counting indie games, that most of the time have a budget far below $10m.

So my question is, what is high and what is low?
If a game has a high budget ($50m+) then you can be sure it's a hit. Usually a sequel in a successful gaming series or the new IP from a well known developer (Bioware, Bungie etc.). Don't worry those will surely break even.

Everything else already has a medium sized budget. No point in reducing that any further.

There should be games made under all size of budget and price point.

Since when does the amount of money spent guarantee level of success?  Dead Space 2 had a budget of $60 million, and EA said that the 4 million copies sold was not profitable.  I imagine the budget for Dead Space 3 was high as well, with EA announcing they needed to sell 5 million copies to be profitable, resulting in the series cancellation when they didn't come anywhere near that.

Unnecessarily over-bloating a budget doesn't = sales.  Gears of War 1 & 2 were made on $10 million budgets and each sold over 6 million copies on a single platform.

I don't see the problem, to be honest. There are scores of lower price games out there, far more than AAA projects.

Do you mean the big publishers? Some of those do make games at lower price points, like Ubi and Square. Others, like Activision, only produce a few games each year and it's fine if they concentrate on blockbusters.

Blockbusters are the ones that can bring in an enormous profit, which can lead to more games or shelter a company from unexpected losses. Sony once said that it's the big games like Uncharted which fund all the smaller games.

They already do make lower budget games. They sell new games now for $15 to $65. In 1986 all games were $40 or more and that was then. So prices are better now. Yes some of the AAA games go crazy on budget but others are being conservative.

Yes.

Factorio is a pretty big PC game.
It has sold over one million units so far.
I have not played it myself, but my friend loves it: so it must be good.

As for 2D games vs 2.5D or 3D titles.
No single solution is superior.
Regardless of what a developer picks, there will be trade-offs.

My friend linked me to their development blog, and they showed their workflow.

From memory: I think they use Blender to do the modeling and Cycles (Blender's path tracer) to render the models as sprites.
http://steamcommunity.com/games/427520/announcements/detail/1460718682944077082
https://www.factorio.com/blog/post/fff-146