The buyer of that $100 knock-off was never ever going to buy my original set for $1,000 - so I didn't lose that sale.
Regarding TLG, if their customer is someone who considers their purchase to be a disposable item (seeing it as a toy to be played with, lost and scattered around, only to be thrown away in a year or two), they might as well spend less for a bigger/better fake set (since they already consider the purchase to be without value). Also, since most of the current sets are available as fakes, many will prefer to spend less on the fake garbage now, than to spend much more for the actual LEGO (if they expect it to be worthless later).
At this point though, the perceived threat of the fakes (warranted or not) does have an impact on values, since many investors have reacted with fear (selling too soon), forcing down prices, as many have looked to lock in their gains.