Can anyone explain this?
You can only go so far in mechanical quality, so that beyond a certain price point you're paying for wearing finer jewelry. You can also pay $5000+ for a decorative bracelet that doesn't tell time at all. A very expensive watch is both, but I don't think it functions appreciably better once a high degree of accuracy & durability is reached. It then becomes a matter of appearance & prestige.
I also own a $500 genuine diver's watch I've had for 25 years and perfectly serviceable (I have no idea what its value today is, it's now my beach watch, absolutely indestructible, certified to 200M/650ft). I've also owned 18k solid gold wristwatches. I actually went through Army Basic Training and my first 6 years of active duty wearing one almost daily, before I went digital. So funny - I was low-crawling through mud wearing a watch that cost as much as my soldier's pay for an entire year in 1969. I never thought of that until this moment.
But I tend not to be ostentatious in my accessories, preferring functionality over flash. The rule I follow is the one my late mother taught me. Buy higher price when it gives you higher quality & durability, but not simply for brand name or prestige. Better quality will outlast 2 of the cheaper (like my diver's watch), and actually save you money in the long run. Plus you'll enjoy its finer features the entire time you use it.