Steel quality is the main difference. Good steel is harder to work with but holds an edge very well. The traditional Japanese Katana was made from folded steel not unlike Damascus steel. 9 folds that yield 512 layers. Each layer is VERY thin. Very strong. The final step is the tempering. The spine (back) of the blade was encased in clay to keep it from heating up too much. The edge is heated and quenched to leave it VERY hard. The spine is more flexible allowing the blade to flex.
Once finished, the edge was tested by cutting off heads (yes, people. Peasants). It was noted how many heads were taken cleanly. This number was engraved on the blade. I guess it sucked doubly bad to be the poor bastage that was not beheaded cleanly.