They are infatuated with his "all round" ability. In fairness I think that if there were 3 or 4 young guns knocking down the door then he might struggle to hold his batting spot. Look at all the players who have debuted over the last 12 - 18 months and they are all middle of the road all rounders - Maxwell, Henriques, M Marsh, Faulkner, or they are bowlers. Alex Doolan was the last genuine batsman to get a run and he struggled. Or they go back over old ground with guys like Hughes, S Marsh, Khawaja, Cowan etc.
So until someone starts putting some scores together in Shield then Watson will keep getting picked I would imagine. To be honest I quite like what he offers with the ball, he is a good partnership breaker, and can move the old ball. Problem is that his body can't handle the workload of being a bowling all rounder so he needs to justify himself on batting alone and maybe rolling the arm over here and there. Ideally you'd have him bowling more regularly and batting at 6 or 7, but he'd only last 2 or 3 games before something would break.
Lot's of questions are going to asked of the Australian batting line up over the next 18 months - 2 years. Rogers can't hold on long past next years Ashes you would think. Who knows what the outcome of Clarkes ongoing injuries will be - he might only last another 12 months. Haddin is not getting any younger either. So you would think on the current balance of things the only 2 locks are Warner and Smith.