If I have a watch for telling time, I want it to be as small and thin as reasonable.
If I have a watch as a fashion accessory/jewelry, being small is no longer a design parameter, and in fact being larger might be seen as positive- like a large diamond ring.
Well, you feel that way, but not everyone does. The point is watches are largely jewelry/fashion accessories now, and in the land of fashion, throw out everything you knew about practicality and functionality.
Don't know how you came up with that interpretation. I'll go ahead and break this down for you, since it seems like you've never actually proposed to somebody. Typically you talk to your friends about rings, shop around, etc. You've likely already been talking about getting engaged, and asked for your girlfriend's opinions on rings as well. Throughout this process you'll get a good estimation of people's opinions on what is aesthetically pleasing -- from my experience this tended to be low set, solitaire or princess, moderately sized diamond rings.