Watch storage space disappearing

I have a Series 3, and I've been very frustrated for a while now. When WatchOS 7 was released I couldn't update because I didn't have enough storage space. The watch has 8GB of storage. It tells me that my capacity is 4.1 GB (so I assume ~3.9 is taken by system files). What is odd is that it shows I'm using 1.8GB, but the usage on the watch adds up to about 21MB (mostly photos that I can't figure out how to remove). I have no additional installed apps, no music. Nothing.

I know way to fix in the interim is to unpair and do a factory reset, but that's a painful bandaid when it has to happen with every update. So when 7.3 was out I tried contacting support to figure out the underlying issue and remedy it, but after spending some time on chat and phone support there was nothing of substance. So I broke down and did a full reset (for the 4th time) so I could update to 7.3. It updated overnight and this morning I had 2.2GB available. I restarted and now have 2.3GB available. This was freshly reset yesterday and now I couldn't even update it again if I wanted to. What is using that 1.8GB? If that's the system files then what happened to the rest of the 3.9GB of the 8GB total? Is it not removing temporary files after the update? Does anyone know?

The associate I spoke with on the phone was helpful, but when it came down to it he told me my options were basically to live with it, send it in for repairs which would cost almost as much as a new one and might not even solve the problem (associate's words, not mine), or get a new watch.