Excerpt from the link you posted:
With watchOS 7, the Apple Watch now uses multiple sensors, including the optical heart sensor, GPS, and accelerometer, to estimate lower values as well. This is important in that the direct measurement of VO2 max usually requires rigorous clinical testing with special equipment that is not easily accessible to most people. With watchOS 7, Apple Watch can also take cardio fitness measurements while users run all day, whether they are following a workout or not. With this innovation, the Apple Watch can measure VO2 max better for users with low cardio fitness who may not be doing high-intensity exercise.
So the heart sensor, the accelerometer and GPS are required. It usually only works outdoors. "run all day" probably means outdoors. If there is a good GPS reception indoors and you can cover a measurable distance, then it will also work indoors. But I think it only works at the airport or something like that.
It would be great if Apple would offer a cardio fitness solution for indoor use.