It is an aspect of collecting. Meaning, it doesn't make sense from a purely utilitarian point of view, but a lot of folks are also collectors.
You can see this in any number of niche areas. I'm into mechanical pencils and fountain pens. In the mechanical pencil world, the Rotring 600 is one of the most iconic pencils - sort of a "gateway drug" to becoming a mechanical pencil aficionado. Not only does it come in a variety of lead types (0.5, 0.7, 2mm, etc), but also many different colors - and some collector's want at least one of each.
As with watches, a cheap $2 mechanical pencil (or $10 quartz watch) will suffice, but that's not what it is about (from a collector's or aficionado's) perspective. There are mechanical pencils that cost hundreds of dollars, and don't even get me started with fountain pens, which also have a luxury/status component.
Not to mention that there's the factor of aesthetic pleasure (also, in kinesthetic pleasure - the feel of a well-made, cool looking writing instrument in your hand). I bought the Eberron alt cover for $50 at my FLGS not because I'm anti-Amazon (well, I kind of am - but sacrifice my morals for convenience and economics), but because I loved the cover art - to the point that I was willing to spend $20 more on the cover.