There are some functional benefits to a wrist watch over a pocket watch such as the ability to tell the time even with your hands full, but really, watches (particularly at the higher end) are more about being a piece of jewelry than funcitonality. Consider the fact that a $10,000 Rolex or Omega automatic is typically substantially less accurate than a $100 Seiko with a quartz yet people still pay the substantial premium. Heck, I've found myself guilty of wearing an automatic watch set to the wrong time because I was in a rush in the morning and wanted to wear the watch for the look.
There's tons of better, more accurate sources to tell time, but people wear watches anyway. When you start viewing watches as just a piece of socially acceptable (typically male) jewelry, they tend to make much more sense.