Why do Nintendo fans buy a plug and play for 120 dollars?

I use emulators myself, so I ask the very same question. 

Something I've noticed tho: people who "have money" don't mind spending it up, even on needless sh*t. So maybe thats the more correct answer to your question.

It's to put on your shelves as a decoration. I can't think of any other reason.

The nes and snes are pretty much collectables, and they are really nice little gimmicks. Also, not everyone is able to emulate games so this was a nice choice. And they weren't 120 dollars. When they came out they were around 70 75 ish, but after some time they dropped to around 60 ish dollars. Only a reseller would sell it for 120 dollars.

$120 is not what Nintendo charged. Nintendo charged $70 for it. $120 is the price "George" on eBay wants you to pay, because he knows someone out there is stupid enough to buy it for that much.

Same reason they buy Netflix rather than illegally download movies

They might not want to download illegally even though it isn't really policed.