It's gift etiquette to exchange gifts of roughly equal value
Have you ever been embarrassed because you have received a gift that is far more expensive than you expected and from someone from whom you wouldn't normally expect such a gift?
You don't know what to do about it as it feels a bit weird, as if they might expect something more than a simple gift in return.
Some people take advantage of gift exchange to try and score points over others. They deliberately give unnecessarily expensive gifts in a misguided attempt to prove their superiority. This isn't in the spirit of giving and generally creates negative feelings towards the extravagant givers.
Buying for other people’s children outside the family is an example of where care is needed.
Often it's a gift to take to a birthday party. In which case you buy something that corresponds in value to the gifts given by other children or that your child received at their parties. Any attempt to get something bigger and better is just seen as showing off.
The unspoken rule of gift giving, except to those closest to you, is to give a gift that’s comparable in value to what you receive.