Its simple, the reason people pay so much for a pen is because of the name, and to show off that you have enough disposable income to buy it.
Its the same for a watch, why spend the crazy amount of money for a gen watch when a swatch or a casio will tell the time just as well, and some times even better (quartz vs manual).
I had the same conversation with a friend of mine who has about 20K in his 3 watchs, and his reply to me was "Simple, i'm 24 and I want to show off that I have money, thats why."
We are all about the image, what you wear is a reflection of where you place in society. This is why people want to have replicas, brcause they want to have the image of having money, so people will treat them that way.
And for the people that claim its not about the name, its about the watch, well if that was the case you could buy replica watchs that don't have the name brand on it for a lot less, so why did you buy the expensive replica?