Thread count does not indicate quality. Instead, thread count is defined as "the number of horizontal and vertical threads per square inch". However, using thread count to indicate quality has been stuck in the American psyche.
The Great Marketing Strategy:
The idea of using thread count to determine quality was initiated in the mid-1990s. By the early 2000s, the myth about thread count had reached a new level of absurdity with companies posting 1000 plus thread counts. Today, we see this marketing tactic extended into grocery stores. Labels using the words "organic" or "non-GMO" are slapped on products to indicate something is "healthy" or "healthier". We've seen this used on orange juice... folks... there IS NO GMO orange. That's not even a thing. It's just a marketing ploy to make you THINK you are buying "better". AND IT WORKS. Similarly, we look to thread count to indicate quality but that is just as misleading as a non-GMO orange.
For the most part, anything above 250 threads per square inch has been manipulated and the manufacturers are counting plied yarns to make up the entirety of the thread count. A plied yarn is a yarn that has multiple strands of yarn twisted together to create a stronger, longer yarn. Often cheaper, weaker cotton is used and requires the extra strands of yarn for strength.