I think there are a few driving factors: The first is that, for the first time ever, we can wear huge watches. Modern society is extremely and increasingly casual. Only a tiny fraction of men are expected or required to wear suits or coats to work. Not many more have to wear long-sleeved shirts at all. Today, the daily uniform for many men is jeans or shorts and a polo or t-shirt. For the first century or so of the wristwatch's existence, its size was largely constrained by the need to fit easily under a shirt cuff and jacket sleeve. Now that so many men wear short sleeves on a regular basis, watch manufacturers have been more free to bulk up the size of watches.
The second is, quite simply, the peacock effect. Western culture, particularly North American culture, tends to equate big, heavy, and flashy with cool, tough, and masculine... though many of us find that equation questionable at best. Many men think it's cooler and more attractive to wear a large, flashy watch than a subtle, understated one. That seems to be a matter of taste, perception, and circumstance.
The final factor is that Western people are getting fatter and fatter at an alarming rate. A lot of larger men think they need to wear a huge watch to look proportionate, or at least, they are self-conscious about wearing a smaller watch that they feel may emphasize their size.
Personally, I'm not a fan of the huge watch trend. I think 35-43mm is a size range that actually accommodates the majority of men.
I was shopping around for a GPS/heart monitor at REI the other day and tried on a Timex that nearly gave me a heart attack... 50mm wide, 60mm tall. And that's basically a lightweight, plastic computer strapped to your wrist... I can't imagine wearing some of the oversized, metal clunkers that are available today.