A $200 watch can do the same job as a $9999 or even $150000 (absurd!) watch. I just can't see any justification in a watch that costs in the thousands, it does not guarantee you accuracy. My watch is nothing fancy but keeps time perfectly. I only adjust the time two times a year (start and end of daylight savings) and it never noticeably drifts from the gps time . So, where does the extra money go in this old and easy to produce piece of equipment?
You're right in saying that a $200 watch (heck even your phone) does basically everything that a $500,000 one does. But to be honest, accuracy isn't the reason someone with the money buys an expensive watch. We have phones for that. For me it all comes down to craftsmanship. The fact you're wearing a largely hand made, hand decorated, and hand assembled piece of art makes it all worth the money. As well as knowing the fact a watch maker has put hours, upon hours, and in some cases even years of their utmost skill into making your watch. Rather than just being pumped out by a machine.
Having to spend five to ten thousand dollars just for a brand name on your wrist to impress others is pretty vulgar (and sad) in my opinion but each to their own.
Again to me this has extremely little to do with why one might buy a high end watch. Unless you buy a solid yellow gold Rolex, you're very unlikely to draw little, if any attention to the price of your watch. This is because a very small percentage of the population know the really expensive high end watch brands. To most, names like Patek Philippe and A Lange & Sohne mean nothing, despite the fact they make watches which cost anywhere from $20,000 to $5,000,000.
Literally yesterday I spotted a customer at work wearing a $40,000 Patek Philippe (I work at Anaconda mind you, so not at all somewhere flashy) and to be honest I can't imagine he ever really gets any compliments about it. Simply because most don't know who Patek Philippe are and he didn't flash it around and tell everyone its value. So to everyone it looks similar to many other $300 stainless steel sports watches. I imagine the only compliments he gets are from those who actually know what they're looking at.