It really is bragging rights; although very few people care about it. I'd say the SCNCA community is probably less than 10k racers. Those are people who actually put some interest in their competition and the other categories (many of the racers could care less). If we whittle it down to masters, that's probably even less. Cat 1 seems to be the number when non racers start to suck up to you. We have a few guys in our group rides that are meh towards everyone but light up like a Christmas tree when the DPros and 1's show up. I've always hated those guys; it probably comes from getting that treatment growing up in foster care.
I think for those of us stuck lower than that its about the competition.