Low end components. The experience is not going to be anywhere near that of a PC tethered Oculus and it's going to be more of what you find on Daydream/Gear VR.
(I know iPhone screens aren't high-DPI enough for VR, but I doubt a screen in a $200 product would be much better, and the processor/GPU would surely be inferior? I'd really like to get into VR at a decent price point, but I just can't see how this works.)