You can probably use the iPad's builtin hdmi out feature for free, but it will output an iPad-shaped display. The one you pay for will dynamically resize to fit the screen it's attached to and display different stuff. Not a huge difference but it isn't like they did NOTHING for the feature.

Why is it absurd?

It’s price differentiation. Pure and simple. I think that’s a very reasonable way to make money.

I guess they should offer a version with banner ads all over your dashboard.