So, when I press the button clear all, to clear all the notifications, the watch lags out for about 3/4 seconds, and then goes back to normal. Its an odd behaviour, because it only happens sometimes, but is being more recurring than before.
Did you already try to force restart your iPhone and Apple Watch?
Force restart iPhone - Apple Support
To force restart your watch, press and hold the Digital Crown and the Side button together for about 10sec, until the Apple logo comes back again.
If the issue persists, unpairing the watch would be the next step:
Your watch is connected via Bluetooth to your iPhone, and deleting messages or notifications on the watch will also delete them from the iPhone.
Force restarting the iPhone as well will make sure that the connection is working correctly and clear possible glitches.
I havent tried restarting my phone, but I already restarted my apple watch and verified that I have all up to date.
What would be the relation between restarting my iphone and the apple watch?
Apple Watch SE 2022 lag when clearing all notifications
