The reason those watches cost so much is because (like another posted above) they are mini computers you wear on your wrist.
I have a Samsung watch that is paired with my Samsung phone. The "watch" is much more than a "watch." Oh yes, it shows what time it is. But, because is's paired to my phone, it also works as a phone (I don't need to carry my cell phone with me any more). It has all my contacts and the ability to read text messages, as well as make and receive phone calls.
It also does things like, track the distance walked every day, records your daily activities (exercise), and calculates how many calories burned every day.
It tracks my health, heart beats, works as a compass. It has Google on it, a calculator, and even has the ability to record how I sleep at night; how much time I'm in deep sleep, REM sleep and so on.
It records my stress level, as well as local temperature.
Basically, almost everything my cell phone can do, the "watch" on my wrist does the same thing.
THAT is why it costs so much.