Better quality mechanical watches use jewels to reduce friction on the moving parts; the more jewels, the less friction and the better quality watch (in theory). A much better explanation can be found here: http://www.timezone.com/library/workbench/workbench0025
That's right, they are simply there to reduce friction between moving parts. Having more jewels doesn't always mean that the watch is better, only that it is more complicated and perhaps has more functions. There is lots of information about the Soviet Russian movements/models in particular that you are reading about at http://www.russianwatchguide.com