After owning several Japanese bikes and switching to KTM, I would say the main difference is that the Japanese are all about refinement and the KTM's are all about cutting edge technology. For you ag guys out there, it's like the difference between John Deere and Case-IH. The last major technological breakthrough that John Deere introduced was the mold-board plow, but their products are solid as the steel they're made from. International came out with the rotary combine in the '80's (which John Deere copied), had financial problems, got bought by Case, who came up with a bitchin' power-shift transmission in the early '90's (which John Deere copied). But International and Case-IH have been bought and sold a bunch of times, unlike John Deere.
O.K., back to dirt bikes. KTM loves new technology. Upside-down forks, linkage-less shocks, hydraulic clutch, goofy looking brake rotors. It's cool stuff but in some cases can be higher maintenance. A perfect example is the linkage-less PDS shock. On the surface it would appear to be the better alternative because you don't havelinkage to grease. But the heim bearing that partly makes the linkage-less design possible is ridiculously wrong for this application. It wears out in less than a year if you don't wrap something around the lower shock pivot to keep the crap out of the bearing. Even then, I feel lucky to get a year and a half of use before having to spend $75 to replace it. I'm betting that you won't see this design on a Japanese bike for a long time, until one of them finds a different kind of bearing to use. Plus, the PDS shock has not always received stellar reviews (although I like mine just fine). The hydraulic clutch, though...why those haven't shown up on Japanese bikes is a mystery, other than they pull harder than they should.
My point is, KTM and some of the others (TM, Gas Gas, etc.) aren't afraid to go cutting edge. After all, when you're a drawf among giants, you gotta be proactive. The downside is that sometimes all the bugs haven't been worked out before the new technology is introduced. The Japanese absolutely refuse to take that risk, and maybe Cannondale becomes the cautionary tale of proactivity. However, I was very impressed with Yamaha for its 4-stroke development. That surprised me in a big way, and I wish they'd keep it up.