What does 17 jewels on a watch mean?

Reducing friction is important to watchmaking.
Instead of metal moving against metal, watch makers discovered that jewels cause little friction or wear. Jewels are hard and don't wear down very quickly. By the time of the American revolution, tiny doughnut shaped rubies were being inserted into pivot points on watches to keep them from coming into direct contact with the edges of the hole. This in turn would make the watch last much longer. The jewels could be diamonds, sapphires, or most commonly rubies. However, the process was time consuming and expensive. Jewels were placed in only very high quality watches of that era.

Initially the railroad system adopted 17 jewel movements as the "minimum" necessary for the railroad watches of its conductors and engineers. By the early twentieth century many railroad companies specified 19 jewels or more. While there are watches that where made to resemble a railroad watch with less jewels, they were made as cheaper imitations for the general public.

You may have noticed that there are tiny red or pink dots at various places on the bridge and pillar plate of your railroad watch. These are the jewels.