They're all games, just with a different focus. ACC, AC, AMS2, iRacing, and so on. All games. Sure, people spend thousands on hardware, but that doesn't mean it's not a game. A game you could play with a controller if you like. But PC hardware is expensive - I've been building computers since the 90's and when I started out, you could build the literal best system money could buy for less than the cost of a single top end graphics card now. The games industry is booming, after the doldrums of the late 00's, and people are happy to part with lots of money, so there are hardware companies more than happy to provide for people with lots of disposable income.
You don't need to spend thousands on a DD wheel and Heusinkveld pedals to play iRacing, or even to be competitive. High end hardware isn't about making you quicker, it's about giving a more immersive, realistic experience. It's also, to an extent, 'big boys toys'. I can guarantee you that 90% of the Youtubers you see using top end DD wheels are only doing so because they've been given them for free; all will have started out using cheap kit, and would likely still be using cheap kit had popularity and sponsorship not allowed them to do otherwise.
in the end, people spend thousands on sim rigs for the same reason people spend thousands on a suit. Because you can afford it and it makes you feel special. But functionally, there's almost no real difference in utility.