It seems like the real issue is either with watchOS or iCloud storing too much cache on the Watch — particularly on Series 3 Watches. The only remedies given are variants of ‘restart it’ and ‘wipe it.’ Since the used storage on the Watch accretes over time, the issue will inevitably happen again — probably at the next update.
Apple seems to be aware of this issue. They apparently have decided that the Series 3 Watch is deprioritized for any kind of real fix, and are just telling people to wipe and start from scratch every time it happens. Or, they’re hoping that people will just shell out hundreds more dollars for a newer Watch. That’s unacceptable for a premium brand like Apple. If you say you support Series 3 Watches, actually do it.