Good point, I think a lot of it could be defined by cost, but also the emphasis placed on aspects of the watch that are embellishments rather than functional advances. The Rolex's now use a slightly different stainless steel from the industry standard, and have marketed their formulation of steel like it's a precious metal or something. It does have advantages in corrosion resistance, but you're right; there are more exotic steels to be found in much cheaper everyday items.
That's not an analogy, actually, that's a completely nonsensical and illogical conclusion that has nothing to do with what I said. Did I say that a Rolex can't keep time or perform the functions of a more basic tool watch? Absolutely not. To give you a more appropriate analogy, you can plate a Gelandewagen in gold and it will be just as good of an offroader as it was before, but it's not quite in the same spirit as the car was originally.