Marketing 101. Some people are ready and willing to have paid a premium price just so they have spent more than someone else.
Premium brands exist in every single market sector.
Leica isnt a traditional premium brand per sae, from about 1940-1980 they were very much a player in the profesional camera market, as the M-series RF cameras were popular among press photographers, photojournalists and the like. Most of the Magnum photographers favoured a Leica (Cartier bresson, et all) due to their compact size, durability & of course, Image quality. Indeed, Leica can almost be credited with inventing the compact camera, with the Leica 1, which was a pet project of a engineer at leica (when they mostly made microscopes & surveying equipment) who wanted a small camera that could use 35mm cine camera film.
Of course there are things Leica didn’t do so well- their film SLRs were mostly made on conjunction with other japanese camera makers, with the M-series remaining their pride & joy, made in small numbers with a price to match. Of course as news photography became increasingly digital, use of film died out, apart from with more traditional long term photohjournalstic projects. They were late into the digital game, with a digital back for one of their SLR cameras, the digital-modul-r for the R8, which of course was expensicve & didn’t sell too many. The digital M-series cameras are very nice, but with the leica price tag to match..