well basicly the gems heve the same purpose as anywhere alse - to get money from the reader.
When you read episode original stories almost all have in each chspter a gem choice. But usually and in this ouy are right readers is not punished with bad ending for not using gem choices even in the original episode stories.
In comunity sories it works the same - because most reades do not like them writers usually do not give them or use them only to boost up point if the story has point system…also it is new feature still in beta testing if I am right so some time ago comunuty writers were not able to add gem choices.
It it has some advantage for the writer - yes it might have…episode can actually pay you for your story if you get enoug reads…and thay request less reads if you have gems in chapters…so with gem choices you can get quicker beteen the people who make money on episode.
But it seems to me writers here do not misuse it the way you described.
I use the gem choice for bosting up points…reades get points for choices if he choices right e doesnt neeed the boost …points are used for unlocking special scenes…but I make it so that you do not get plane bad outcome if you do not have enoug points…I didnt ad the gem option there before I added it after fans were asking for it.
And no I am not making money from episode. 