They are vanity, no disagreement there. Largely a piece of jewelry that provides some usefulness (telling time). The whole "$10 kids watch telling better time" thing is a bit silly - mechanical watches are just as accurate in a relative sense for what they are used for (getting to a meeting not putting things into orbit).
I think in a lot of business settings a digital watch looks very immature. It obviously depends on where you are (geographically) and what field you work in.
But yes, I agree it's mostly status and vanity. But it looks (to me) much more professional than having a tiny cellphone on your wrist.
I don't think anyone remotely believes smartwatches will replace regular watches en masse. It comes down to preference and usage - there will be those who don't wear any watches, those who wear smartwatches and those who wear regular watches - and no one is right or wrong.
For me, there is daily utility I get from a smartwatch that I value, even as immature as the segment is. There are at least a dozen times a day when it would be inappropriate for me to pull out my phone, unlock it, and read a notification (generally when in meetings) and another dozen or so times it's just inconvenient. Being able to glance inobtrusively at my wrist to check if it's important has moderately changed how I interact with my phone - especially since I can control exactly which notifications actually go to the watch.
Secondary functions like controlling the music player, checking weather, setting a quick timer, and being able to answer specific type of calls are genuinely useful.
Just an hour ago, I was outside coming back from a performance with my phone in my jacket pocket, my jacket buttoned up, and gloves on. I got a call and normally I'd sigh, pull off a glove, unbutton my jacket, pull out my phone, open the S-view cover, and answer the call. For who it was, I was able to just answer it on my watch and while keeping it a good 18" from my face, have a 10 second conversation. The speaker/mic on it works surprisingly well.