I think you're being disingenuous, you perfectly understand this phenomenon but it doesn't appeal to you. Paying for pixels will always be dumb anyway.

Do you wear jewelry? Do you have a nice watch that tells time just as well as a casio? Does your car feature upgraded wheels or upcharged paint? Have you paid more for fancy curtains when basic ones do the same job? Have you repainted a room just because you wanted a different color? Art, collectibles, novelties? Video game cosmetics are valuable to anyone who wants to express themselves the same as any other real life cosmetic. It can be especially important to young people who don't have other avenues.

That being said, fortnite is predatory as fuck and is one of the worst offenders for addictive design, FOMO engineering, and maximizing DLC purchases. It's what the annual sports games wish they could do. It's what CoD started to do. It's fueled by social media and by glimpses of random players in each match with the latest skins.