You've got it.
These movements and jewels may be very fine indeed, but ultimately they are an excuse for buying luxury watches. They provide a reason for people to spend thousands on a watch other than, "It's Swiss and it's made of gold." Compare watches to say, luxury attire. The latter offers finer fabrics, a better fit and superior design, all of which are immediately apparent on their owner. By and large, the idea of counterfeit high end men's clothing is laughable, and non-existent. A respectable "replica" of luxury attire would incur most or all of the same costs that the genuine article does. Counterfeit luxury goods become a plausible enterprise when you're paying for something extraneous or unobservable. Or cars. Luxury cars offer superior performance, comfort, aesthetics, safety, or technology, or some combination thereof - you're still paying for the name, but there's no way around it, and you're still getting a tangible return.
Imagine if you could make some extremely elaborate device to make coffee. At each step of the process, it would have an ingenious set of mechanical wizardry shepherding the process. But the coffee it would make tasted just as good as your old coffeemaker. And, from the outside, it looked the same too. Would you pay 20 times as much for our wondrously made coffeemaker? Add in some sentimental schmaltz like "Manufactured in a Piedmontese hamlet with a storied history of brewing espresso" etc. Aside from the commodity values of the materials in genuine watches (eg gold, silver, platinum), how are timepieces different? I see no compelling reason to pay for craftsmanship from which I will not derive benefit, as opposed to a beautifully made shoe or a well-carved wardrobe.
Honestly, you aren't supposed to think about these things seriously, because then you'd realize what a sham it is. It's just something people do because it's de rigeur for their social set, and/or they want to show off they made a little mammon. Spending money is sometimes necessary to get something that looks good, but that isn't the case with watches. Most are not confident in their tastes; they need the assurance of a brand, a professional, a trend to don a watch or pair of shoes with confidence. To ably discern refinement requires an outlay of time, and some prefer the shortcut of a socially acceptable brand to discern for them.
Personally, I abhor the idea of luxury watches. I could justify spending $5000 on a bespoke suit if I had the discretionary income - I like nice things, but I'd only pay if there was no alternative. But my requirements for a watch do not call for $5000 in materials, only the few dollars or so that a replica costs plus markup. I have a very specific conception of the watch I want, and it so happens that the best looking option is a $20,000 Patek Calatrava, or a replica. I knew what I wanted long before I had even heard of Calatravas, roman numeral lettering on a white dial without a seconds hand or tick marks, something like a grandfather clock dial. I had a Seiko watch to this effect (SJB022), but the design was not optimal, and I broke it. Then again, it's different if you want a design peculiar to one or another watchmaker.
Paranetheically:
Would you propose to a woman with a cubic zirconia ring if no one would ever find out? Say you put the savings towards a future home or college funds for your children, yet to be born. You value the woman, after all, you're pledging eternal loyalty to her, and you do in fact have the money...