Out of Media Storage error; Apple deliberately limits media to less than storage total?

I made the mistake of updating to a point-oh OS version, 7..0 on my Apple Watch 5, and shortly afterward, went to the gym. And I was not able to listen to the playlist I wanted.

When I got home, I dug into the Music section of the Apple Watch app and found this big honking message that I'd never seen before:

Out of Media Storage

The storage space dedicated to media on your Apple Watch is full. To make space available, you can remove some podcasts, music, or audiobooks.

Well, I have no podcaxsts or audiobooks, only music, from my music library. And even getting all the music from my library that I wanted on my Apple Watch had always been problematic because I rip my music from CDs as Apple Lossless to have the highest quality, but I neither want nor need files that big on my Apple Watch, not when I bought a wireless version 3 just to get the 16GB of storage, nor when the storage was expanded to 32GB in newer versions.

Why do I want music on my Watch? So I can go to the gym or elsewhere for workouts and not need my phone. I can listen directly from my Watch to my headphones. Easy peasy, right?

Nope. In the past, to get all the music I wanted, several playlists that are a subset of my library, I'd synch my iPhone with the setting in iTunes to copy then as 128 bps files. Then I'd add the playlists to my Watch and wait for the slooooooooow sync (because Bluetooth data transfer is achingly slow). Once I got all my music on my Watch, I'd de-delect that option in iTunes, re-synch my iPhone, and get the lossless versions on my iPhone. Well now, for some reason, I only have a couple of my playlists on my Watch. The rest have a but yellow exclamation point in a circle.

I'd always had all that music on my Watch, all that I wanted anyway--at least until I did the update to WatchOS 7.0.

A hard reset of my Apple Watch didn't resolve this error. The various data said I had 8GB or music on my Watch, which was only 296 songs, and 16.3GB free. No other apps took any significant space.

So last week, I spent a good 2 hours in chat with Apple Support. We did the reset thing. We did the re-pairing thing. Nothing worked. And the tech finally found an internal memo that said Apple deliberately limits media storage to 8GB.

What? Why?

That is undoubtedly a boneheadedly stupid decision, one that needs a clear explanation. Quite simply, there is no technical reason why such a limit would exist. Some might assert that it's deceptive to advertise "32GB" of storage in a device where you can only use 8GB.

But wait, it's worse?

As anyone who has had the misfortune to install a point-oh version of an OS, you anxiously await the first point-one release. Which is now installed on my Watch. Did that make the error go away? Nope. It had the opposite effect!

I now have 194 songs on my Watch that use 4GB of space.

I have 20.4GB "available."

"Available" for what, I do not know. Not "available" for what I want to use it for. I mean, I recently bought a new MBP to replace my 2013 and got a 2TB SSD. Among the files I expect will take some of that space over time are movie files that I download from iTunes, er, the TV app, to take with me. Let me tell you , if you do not already know, files of HD movies are HUGE, especially if we're talking about movies such as The Lord of the Rings. Now imagine if I got a message when I was downloading several of my movies that I was limited to just 500GB on my storage. That's what we have here with the Watch.

I cannot find any posts here that address this, so here's one. Apple, what say you?