That sounds pretty over the top. It's definitely not something that happens in my social circle, so is a entirely new world to me. If people want to have a big party, though, why not. If it sounds like it would be fun to go, why not.
DS went to a private elementary school with pretty high tuition (it was a school for kids with normal IQs, but learning disabilities where they got a lot of extra help and tutoring) and I was flabbergasted at one party we went to for an 11th birthday. I had the address to drop him off and OMG there were four people doing valet parking on this estate. There were two bounce houses and a batting cage setup. They said bring your swimsuit, and there was a beautiful in ground swimming pool and hot tub -- fabulous landscaping more like a resort than a person's home. And then there was the pool house. This really cool octagon building with floor to ceiling windows that could be opened up for an incredible cross breeze, an industrial sized kitchen, a bar area, and charming seating socializing area. There was an open bar and super yummy horderves (all kinds of them -- shrimp concoctions, veggy ones, unusual and good, but things I hadn't had before). DS went to play with school friends, I inquired as to when I should pick up DS, and the adults said to me, oh why don't you stay too -- even though I wasn't invited vs. coming back to pick up later. I didn't know any of the adults, but found plenty of people I didn't know before who were interesting to talk to and had a super enjoyable time. I'm sure the inexpensive stuffed animal DS brought as a present would probably be something they could donate to a Children's hospital. There was no gift registry or anything like that. By the cute little picture invitation and little RSVP card or phone number, I really had no idea that this was going to be such a lavish affair.
Now then, there is the birthday party we had that year. We did a mad science birthday party (a guy came over and did fun/educational science experiments and a little rocket launch with the kids). We just had seven other kids over mostly from the neighborhood, just served some cake and ice cream and had it in our nice but very modest in comparison 1700 square foot house in a little Beaver Cleaver type neighborhood.
Regarding the lavish affair. I really think the parents just like to do entertaining and the birthday party was a nice excuse to have some people over. And having such a nice place that's so perfect for entertaining and the means to do it, is that really such a bad thing that deserves criticism? There is no need to keep up with the Jones or anything like that here. Everyone can do their own thing or nothing at all for their own kid's birthday. If it's not your cup of tea or you are put off by the gift registry/expectation, skip the lavish party. If it sounds fun, give it a shot.