Some are just decorative, like Christmas tree ornaments. I am making those for some families in my neighborhood and for some of my friends. Handmade Christmas tree ornaments make great gifts because they get re-used every single year until they break, but if they are sturdily made (I use glass beads and wire because they are not fragile), they'll never break and will get reused forever! Or at least for as long as the person I make them for has a Christmas tree. I am Jewish and don't celebrate Christmas but when I help people set up their trees and put ornaments on it, I love coming across past ornaments I made for them. It makes me feel good to see they are still being used.
Other handmade gifts are not just decorative, but really useful, too. For example, I'm making some watches to give as gifts, because it helps people to be on time for wherever they have to be if they can look down at their wrist at any moment of the day and know what time it is. I don't actually make the watch itself. I just make a band with several rows of glass beads, and weave a watch face right into it with .7 millimeter elastic cord. I am also making some beaded eyeglass cords to give as gifts. These are useful, too, because they keep people from losing or misplacing their reading glasses or sunglasses. Useful items are great because people think about you in a nice way when they use them.
My favorite gifts to make, and the ones which are the most useful of all, are glow in the dark safety collars for dogs and cats. I make these with glow in the dark beads and glow in the dark lanyard, or with bandanas and glow in the dark fabric paint. I know a lot of dogs and cats, and I love to make and give these collars as gifts for them because the collars help keep them visible in the dark.
There are many reasons why I like to make gifts for people. It is not because I don't have to spend much money on a handmade gift (but of course that is a positive thing about handmade gifts for people on a budget who can't spend much money).
I like to make handmade gifts because no one likes to receive doubles of the same gift. Since handmade gifts are one-of-a-kind, making a gift instead of buying one is the only way I can be absolutely sure the person I'm giving the gift to doesn't already have it.
Finally, I like to make gifts because they keep me busy and are directly from my heart. Expensive gifts can be good to receive, but it really shouldn't matter about how much money a gift costs. Any gift that takes lots of effort and time and thought is a valuable gift.