Apple Watch update
My watch had message stating it couldn’t update because there wasn’t enough space. I haven’t added any extra content. What do I need to do?
You can try unpairing your watch from your iPhone then pairing it back to it.
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Unpair your Apple Watch via the Watch app on your iPhone.
Then Re-pair your Apple Watch again,this usually frees up
enough storage space to update your watch.And without any loss of data.
Or this;
If you don’t have enough space to update your Apple Watch – Apple Support
Apple Watch update