Oils allow the movement to reduce friction between moving parts. In watchmaking, we oil the rubies, including the wheels and pinions. Oils are therefore important in the watch because they allow a good functioning of the parts and a reduction of the losses due to the functioning and reduce the wear.
Historically, in cold regions like the Vallée de Joux, watchmakers used edible oil and put it outside during the winter. This way a kind of ice cube was formed and some liquid remained around it. Then these two elements were separated and at room temperature one obtained a more liquid oil and a thicker oil.
Oils are used in the movement of the watch. There are three categories of oils: Thick oils (D5) for parts such as the center wheel, middle wheel or the countershafts. There are the fine oils (9020) used for the middle and second wheels. Finally there are the very fine oils (9010) used for the escape-wheel and the axes of the balance wheel.
Oils allow the movement to last over time. Oiling allows the parts of the watch to work better together. Oils reduce friction between parts and therefore reduce energy losses and also reduce wear.
Nowadays, the only remaining defect of the oils is that if a movement does not work enough, the oils will freeze. But this result is also visible after a long use and will require a revision. Moreover, the oils before being used require a complete cleaning of the movement.