It’s a fundamental flaw with the update procedure. They take a snapshot of the current filesystem, download the new OS image to a new partition, migrate user data from one partition to the other, verify the device still boots with services starting without error, and only then drop the old partition. This results in just over a 2x OS Size requirement to perform an update. Delta Update Sizes are irrelevant to the installation procedure as what matters is the partition, and therefore the unpacked size.
The issue is the Apple Watch has no user accessible data interfaces to “recover” the device if the process fails, meaning both the update and recovery process needs to be VERY resilient, versus allowing the paired iPhone to offload some tasks - which it does during the Pair & Update procedure, which removes the migrate procedure.
The obvious solution though is “Optimize the OS itself to reduce overall size”. But, that would require considerable time for a single, low end SKU of a product that is near end of life.
Apple y su software de gran calidad, episodio 153. Menuda chapuza.