A few reasons I list below.. but an anecdote: my wife usually travels for work and just gets the cheapest rooms. I have IC RA Marriott Plat, etc... she came along for the first time, and now she's spoiled.

Larger suite = can lay out all our luggage after all the shopping to repack appropriately (3 large luggages from all the crap she bought)

Lounge access = quieter breakfast area, drinks free, some have nice views. while these are tied to status and not 'room' upgrade.. the two go hand in hand. you only get room upgrades when you have status usually.

Preferred treatment = this is subtle.. but only noticeable when sh!t hits the fan with your travel schedule.. extend a night or two, cut a night or two short, need a room in really short notice etc.. status helps reduce headaches.

Small details = some fruit upon arrival, dedicated checkin line, some little gift like a chinese ceramic USB key, just some small details that makes a diff over a long time.

When you stay in a hotel 5 nights a year.. any room with a bed, internet, good enough
when you go in and out of hotels half of your life, the smallest details make the biggest differences..