If you read the articles by Philip Guo (PHD Computer Science, Stanford)
http://www.pgbovine.net/advantages-of-name-brand-school.htm
then you'll find that in both industry and in academia, everything is heavily slanted towards elite top tier universities. Even at the undergrad level, just by graduating from a more prestigious university you increase your chances of graduate admission substantially.
Also, most of the foreign grad students attended a tier 1 (top 10) institution in their home countries. I'm talking Tsinghua, Moscow State, Tokyo U, Seoul or IIT Mumbai, which are considered highly selective in their home countries, and these schools are just as hard to get into as MIT and Harvard are. That is why they have reputation overseas as well.
In most countries, there's little undergrad participation in research except maybe a UG thesis. It is simply harder to compete with undergrads that have access to publications, and the top top tier elites have their pick.
The second part is what I agree on. You don't need to go to a top tier elite school to get a great education in science and engineering. There's great programs at top state schools like Rutgers, UT Austin, UIUC, Michigan, Maryland, etc.