Yes, from my perspective (!) a decent amp can make a Walmart guitar sound great. What changes a lot though is playability of the instrument - even if you buy let’s say a 500$ electric it usually just plays better than a 100$ guitar - does not necessarily have to sound better 🙃 So for comfort’s sake it is totally worth it and the better amp is going to make everything sound better, so that’s a bonus.

The most important thing is a good setup on any instrument, honestly. I sometimes play guitars from colleagues and I just can’t connect with the instrument. I bring my guitars every year to the guitar doctor and sometimes adjust stuff on my own. This is not very different from maintaining a car or a home. Good parts on it make a difference, bone nut/saddle and a good bridge transfers any vibration way better to the wood and hence to the pickups. But one can find this stuff in 1000$ instruments easily and you don’t have to bandwagon the Les Paul Gold Top for 25k+ $ :)