It has nothing to do with the false equivalence of other luxury items and their cost and value/usefulness. The issue is that you have no choice.
What about a simple wedding band made of a precious and beautiful metal? Maybe that even matches the couples' personalities and you could get a nice inscription on the inside. After all the circle has symbolism itself in terms of "forever" more than the style right? Nope, has to be a diamond. How about some other gemstone? Bride's favorite precious gem, favorite color, birthstone? Recently departed loved one's birth stone? Child you already had out of wedlock's birthstone? No way, diamonds only.
What if the tradition was a wedding car. Ok, some guys can only buy a $20k car, some can afford $200k. Hey, buy her what you both agree on and can afford, I'm with you. But then what if it didn't matter how much you liked the car, or what it was worth, or how much it costs. What if the ONLY car that was acceptable to get as your wedding car was Jaguar. You could buy the most stunning Porsche that glittered in the sun and you would be called a worthless piece of shit (figuratively, at least made to feel that way) for evendaring to mention the ideaof buying something other than a Jag.
So when faced with this situation, an overly analytical guy like me says: why? And the usual answers tend to be "tradition" "diamonds are a girls best friend" "diamonds are forever" and other nonsensical tripe. Personally all my life when faced with reasons for doing something that amount to "that's just the way it is" I can't accept it, so I dig deeper if possible. Traditions in general I dislike because people tend to follow them blindly, but there can at least be semi valid sentimental and symbolic reasons for tradition that I will tolerate if not embrace.
But what you find when you dig deeper is exactly what OneOfOne has outlined. The "tradition" was wholly and totally contrived for marketing and sales purposes. The value of the stone is artificially inflated by a monopolistic industry who also sits on storehouses full of the shit, since they grabbed a stranglehold on the product in bygone days of unregulated human and legal exploitation. So much so that to flood the market with the actual product would render it worthless. What you find when you dig deeper is that the "why" of diamonds-only-nothing-else-will-do is rooted in a straight up outrightscam.
I don't know about you but when I am lured in by a scam I feel like none other than a sucker. I'm not a big fan of paying thousands of dollars in falsely inflated premiums from my everyday middle class guy salary for the privilege of being a sucker. Much less being told by people who supposedly "love me unconditionally" that only being a sucker is acceptable, no other course of action will suffice.