How do olive oils differ, and what should they be used for?
I can't really tell the difference between most of the big label suppliers of olive oil within the same grade of oil. The actual grade (virgin vs extra virgin) speaks to the processing of the oil and how many times the fruit is pressed. 

I think the flavor is somewhat different between the grades with the extra virgin being somewhat more flavorful on its own. 

In the US, there are also smaller boutique vendors of olive oil that basically treat olive oil like wine. You can go taste different oils with different olive varieties as their base. The flavor does vary quite a bit.

I think whether the cost is justified comes down to how you are using the oil and how much you care. The less you will process the oil through cooking or addition of other flavors, the more likely its worth using the best oil you can get. I wouldn't use an expensive oil to cook the potatoes of a tortilla española, but I may in a simple salad dressing or a dish where the oil is a major independent flavor.