SpaceX is focused on the transportation angle, because frankly that's the easy part (funding aside). Elon has effectively said that other people will have to figure out the harder parts (power, air, water, food, waste recycling, psychological effects of living in a tin can for the rest of your life, etc.).
Thinking about it, though, I see a method in the madness.
As long as getting to Mars (or any other body) is too expensive or impractical for more than a couple of token manned missions, nobody's going to put much effort into researching long-term survival on the Martian surface. There's no point because we'd never go, not in any kind of numbers.
By presenting what looks like a workable, practical, and above all affordable (for suitably loose definitions of affordable) architecture for getting large numbers of people to Mars, SpaceX is providing an impetus for scaling up that kind of research. If you have someone who's serious about putting people on Mars in the next few decades and has the means to do it, then suddenly that research isn't quite such a career backwater.
The ITS is the kick in the pants necessary to shake loose some money for more research into the hard problems of living on another planet.
It may or may not work. The ITS may never get built. But it's an interesting approach.