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In a watch, the jewels refer to bearings for the shafts of the various moving parts as well as the escapement. Jewels, as opposed to plain bushings, tend to be harder and lower friction and thus wear far less and also tend to make the watch run better. The 7 jewels is the minimum for a functional jeweled movement, this includes 2 jewels for the balance wheel pivots, and balance wheel pivot caps, one roller jewel and 2 pallet jewels (the roller and pallets are part of the escapement).

Higher jewel counts have more of the wheels (gears) in jeweled bearings.

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Q: What does 12 jewels on a wrist watch mean?
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