Some people are buying to flip, although if you pay "secondary" (marked up above MSRP), most sellers have taken the available profit. If you manage to find a dealer who will sell you one at retail, whether through a good relationship with them or whatever other means, they're likely going to expect you to keep it. But lots of people end up flipping them as a pinball machine worth of profit is hard for some to pass up.
Spending above retail on a watch is no different than spending above retail on a pin or on a car or on concert tickets. People are paying it and the prices are where they are because the demand is crazy compared to the supply. If there weren't people paying double the original retail, prices wouldn't be where they are. They weren't a few years ago!
I think it's safe to say that the Rolex market has been this way for a few years, the blowup started before COVID. But back in 2015/2016 and earlier, you could buy modern Rolex below retail without an issue and without any kind of wait.
They're great watches, they are very durable, and they have ultimate brand recognition. There are some old sayings about how Rolex are basically an international currency because of their rep - you could easily a Rolex most populated places around the globe quickly if you got in a pinch.
Are they for everyone? Nope. Neither is pinball or plenty of other hobbies. They are a luxury item. One that historically has held its value quite well. Will I pay a huge markup on one? No, I won't. I've bought a couple from Rolex AD's over the last few years but stopped buying them second hand when the prices went stupid. Not unlike many long time pinball enthusiasts have seen with this hobby. Just like machines sell for well over what they cost new because there's hype or demand or because they're great - or some combination of all of those.
Some people buy pins, some buy cars, some buy paintings or other collectible stuff. Horses for courses as they say, everybody's got their thing.
My $0.02 as a "collector" of the brand.