Dungeons & Dragons has used the concept of a "Basic" version since fairly early in the game's history. With the game first being published in 1974, the Holmes Basic set came out in 1978, four years later. Together with an expanded Monster Manual, the Basic Set ("Holmes Basic," or the "Blue Book") was an integral part of the marketing plan for the first radical step in rules revisions that TSR was to make: the new "Advanced" D&D. The Holmes Basic set gave players (and DMs) a full and robust set of rules for playing their characters up to third level but no further.Oddly, it contained several monsters far too difficult for characters of low level. For me, that was like heroin. I had to get the expanded, Advanced game so I could fight purple worms and dragons. From the standpoint of marketing, it was brilliant.
The fact that it only went to third level was absolutely fine to us at the time. It certainly meant that we wanted AD&D, but we saw AD&D almost as an expansion rather than something that would cure the "crippleware" of a Basic set that only went to third level. In other words, I don't think it was crippleware; it wouldn't be now, and it most certainly wasn't at that time in history before the internet made us expect everything for free.
Interestingly, Holmes Basic had LOTS of rules that were completely different from AD&D. Those rules have actually been duplicated and used to created an entire game based on Holmes that reached beyond third level. However, these differences were pretty much disregarded at the time, at least by everyone I knew, as the parts that made the game "Basic." For all I know, that might have been what TSR intended. It's interesting, though, because I think the internet would die of nerdrage if WotC's free (FREE!) Basic Game turned out to have such differences as the Holmes Set did to AD&D.
I don't mean to be delivering one of those "uphill in the snow and we LIKED it" tirades -- I'm trying to point out a couple of areas where the lack of instantaneous communication probably affected the relationship between a Basic Game and an Advanced Game in a big way.
Wizards of the Coast is releasing a Basic Game into the piranha tank of the internet age, and I'm going to take a look at some of the parameters of the game, talking about the entire theory of a Basic Game (and a couple of historical comments about TSR, although I'm very much only a dilettante of D&D's history). For the time being, here is the page with WotC's parameters for the 5th edition Basic Game.