The under-$5 definition matters because it triggers real rules: many brokers will not margin them, most are not marginable at all, and exchanges treat a sustained sub-$1 price as a listing-standards failure that leads to a deficiency-notice.
Spreads are the hidden cost. A stock quoted 0.42 by 0.45 has a 7% spread, so you start every trade down 7%. Add repeated dilution and the base rate of pump-and-dump activity and the arithmetic is hostile.
Example: buying 10,000 shares at $0.45 and being able to sell only at $0.42 is an immediate $300 loss on a $4,500 position, before the stock moves at all.
Related: otc-markets, pink-sheets, pump-and-dump, reverse-split