The lubricants in a watch do exactly what the lubricants in your automobile do and those lubricants dry out and lose effectiveness over time.
Imagine driving a car that hasn't had an oil change or been driven in several years. Not a good idea. Same notion here. So, if you value the watch, get it serviced.
A good watchmaker will clean, adjust and lubricate at a minimum. If the watch is seriously neglected, that may involve an overhaul where the watch is dissassembled and reassembled; cleaning and relubricating every moving part. A good watchmaker will also adjust the timing and check things like water-resistance (seals on water resistant watches dry out and become ineffective over time).
Jewels are used at key pivot points to reduce friction. They have nothing to do with power reserve.
After you have had the watch serviced, it will run better if you wind it regularly, as that will keep the lubricants moving over the pivot points they are lubricating. In other words, the lubricants will do their job better if the watch is running. It will not cause premature wear UNLESS the watch was damaged, the pivot points were severely worn out or if the lubricants have dried or evaporated. Most watches will be lubricated with several different oils each specifically designed for different parts (varied visocities and other characteristics). The amounts of oil used are really small, but so are those pivots.
Friction on pivot points can cause excessive wear that leads to looseness that might not be repairable. Hence, the need for service. Cheaper watches might have materials that are more prone to wear (lower quality metals, less precision in machining or assembly). But, a well serviced watch generally can outlast its original owner.
I am not a watchmaker. But, in a past life, I ran the national service center for a very large luxury watch retailer and I had 35 or more watchmakers on my staff. We performed millions in warranty and out of warranty service on new and vintage watches every year.
A neglected watch is not much different than a neglected car -- even with a very fine and expensive watch or car.
Also, consider that there are two factors your car probably doesn't face. Once is that the pressure involved are much greater because you are dealing with tiny, almost microscopic surface areas. Consider how much surface area something like an axle joint in your car has versus a pivot for the balance wheel in your watch. Then, too, consider that your watch could run 24 hours a day year round; something you would never do with a car. So the advice above about service every five years is well put.
Excellent post! And as a burgeoning collector...I agree with you on service. Unfortunately those costs are getting higher and higher these days. My last service on my workhorse Omega (standard ETA movement) was upwards of $800