To me a real luxury item is one that the masses cannot afford to own. If Apple is a true high end "luxury" brand like so many around these forums believe how in the world can so many people afford it? There might be a perception of luxury by some, but it is a mass produced consumer brand just like the rest.
The problem is with defining the term "afford."
For one thing, for a smartphone, you're talking about an item that costs you $200+ up front locking you into a two-year contract paying roughly $2,400 to use. $2,600 is a lot of money. People have come to think of smartphones as necessities, but they are not. A plain, old dumbphone can get you around from day to day without much drop in functionality, really. The things a smartphone can do are great, but a vast majority of them are not essential.
Then you get to Apple laptops and desktops that are far more expensive than their PC brethren, often costing $2,000, $3,000, $4,000 or more, with little (if any) added functionality.
I would argue that a great many people should not be spending so much money to own these devices. You (and they) might argue that the fact that they have it, make the payments and continue to meet their other financial obligations means they can "afford" it. I would argue that it's a lot of money that could be put to better use elsewhere, and that many people actually cannot afford it when the median household income in this country is around $50,000 before taxes, the average savings rate is in the low single digits, that about 42% of people say they could not come up with $1,000 in an emergency (without depending upon credit cards or otherwise going into debt), that the average retirement account is five figures (well below what most people will need to retire), etc.
All that being said, smartwatches are DEFINITELY luxury items. Some may not be that expensive, but they are absolutely non-essential, which to me means that you ought to have plenty of extra money lying around (which is a luxury) to justify owning one. You could rearrange your priorities, cut back on other expenses to save up a few hundred bucks to get one, but that just means you're making it work for you, not necessarily that it's an "affordable" purchase.