Something that I think isn't being emphasized enough is that Luigi's kill power is absurd. Seriously - any grab at ~105-110% is essentially insta death (and tornado can kill even earlier than that). Luigi also has a fsmash with low start up/cool down that is very strong, a solid USmash, a devastatingly powerful raw bair, two spikes (sweet spotted dair and properly mashed tornado), uthrow at really high percent. and shoryuken Up B. Unlike other top tier characters, Luigi's kill setups are really easy to pull off, which separates him from the likes of say Sheik or Rosalina or Pikachu or Diddy Kong. Luigi also has the benefit of an insane ability to rack up damage off grabs AND get his kills off grabs. Luigi can get ~4-5 grabs and use those with his myriad of followups and combos with his kill options beginning at ~85-90 with tornado and ~105-110 with bair. Luigi's fireball is also really good for creating effective walls that force the opponent to block and thus set up for his grabs. Luigi can effectively skip spacing and approaching in neutral by throwing out fireballs. His recovery is really his only weakness, and it's not even bad at that. Luigi can recover from anywhere, especially if he has his jump. That said there's a time period in which some characters can interrupt his recovery because it's kinda slow, but there are heavy risks involved in doing so because all of Luigi's recovery moves have dangerous hit boxes. You can't really get under Luigi off stage because then you run the huge risk of being Down B spiked. Side B has the chance of a misfire and is a strong hitbox regardless of that. Up B can really hurt depending on how close you are and is also very difficult to punish from below the ledge. The list of characters that can actually effectively gimp Luigi is pretty limited. I mean there's Sheik and a few others like Falcon for instance that can spike Luigi's recovery if they recover too low to the stage and others that can knock Luigi out of say his Side B. Good Luigis make it really hard to clip their jump, but if you can manage to do so then Luigi struggles to recover. However, besides that, Luigi doesn't really have any issues besides maybe an unfavorable matchup against Sheik.
Also as a Sheik main I firmly believe that we are still learning to play Sheik optimally and that there is still a LOT of room for exploration. Optimizing punishes, refining edgeguarding options with needles, new vanish stalling like False has been using in tournament, INCs (instant needle cancels, basically allow Sheik to do tilts and smashes out of a dash), and incorporating various movement options like sm4sh dash dancing, perfect pivots, needle glides, wave bouncing, etc, and more, I definitely feel there's areas we can and will improve on with the character in the future, especially seeing as new depths of movement and options are being explored/implemented all the time. A lot of characters are like this, which can be judged easily by the discrepancies in player tier lists and uncertainty regarding character placements as a whole. We haven't figured out our characters to their fullest potential yet, that much is clear.