If you have no external damage to the case - you’re hearing the worst case estimates. Internal screen damage like you have get repaired flat rate, mail in for less than $400 US as long as the external glass is OK and the case isn't damaged / bent showing a hard fall.
If you do have external damage due to a fall - they are preparing you for maybe paying more. If they can do the repair for less - Apple always charges less so even if they quote $800 it will charge $400 if that's all you need when you send it.
I would call back and get an understanding on the flat rate repair options and have them quote you that. This is almost certainly hardware failure. The reason it would go to 600 or 800 would be due to additional damage to the case (400 + 200) or case and screen and logic board (600 + 200).
If you like this mac, consider that any of the above repairs is cheaper than a new one. Hopefully it’s just an internal screen failure and yours qualifies for flat rate. I’ve never heard of Apple charging a diagnostic fee if you legitimately think you qualify for flat rate, send it in and then decline the more costly repair.
Don’t pay to diagnose it, just pay to repair once you’re sure it’s worth at least 400 to you once made as good as new. Same for the $800 - you get what's a totally rebuilt - new case, new computer tested and warranted by Apple for 90 days for $800 - way better than buying that model used on the internet. The only reason not to repair is you're looking for a different model. In that case find someone who wants a $400 or $800 Mac and gift / sell them yours knowing they have to pay to repair or use it with an external display in closed clamshell mode.