Older Watches ONLY have a rated free, internal data storage space of 8.0 GBs.
After initial flash memory drive formatting this drops to 7.5 GBs.
watchOS is now over 4 GBs in size now. Leaving your older Watch with between 3 amd 3.5 GBs of actual usable internal data storage space.
Also, you must leave some internal data storage space, in reserve at all times, to maintain normal and expected operation of watchOS.
Not sure of how much space for watchOS ( I know what it needs to be for iOS/iPadOS ), but not sure for watchOS.
Let's just say between 500 MBs to 1.0 GB of reserve watchOS space ( it is between 3-4 times more for iOS/iPadOS devices, so I am basing this amount on that figure for watchOS reserve storage ).
This leaves all older series Watches with only a practical, usable internal data storage space of only 1-2 GBs AND THAT IS IT!
This is hardly any space to store much of anything on an older series 3 Watch.
In contrast, the series 4 has a rated 16 GBs of internal storage for a much more actual, usable data storage amount of between 8-9 GBs.
The series 5, 6 and SE models all have a rated 32 GBs of internal data storage for a much more flexible, actual, usable internal data storage amount of between 22-23 GBs.
Your Watch storage is being eaten up by the ever growing size of watchOS.
It is the exact same issues with users of compatible, current iOS/iPadOS, 16 GBs iPhone/iPad/iPod Touch devices, with the ever growing size of iOS/iPadOS.
These OSes are now taking up a significant chunk of the very low internal data storage of these lowest cost, base model older iOS/iPadOS devices, now.
32 GBs iOS/iPadOS compatible iPhone and iPad models are quickly becoming the “new” 8 and 16 GBs devices, now, in 2021, and this situation is only going to get worse for these low internal data storage devices and its users.
After all of this stated, your Watch may have even less than 2.7 GBs.
That because any OS need to have a constant minimum of needed internal free storage for the OS to operate normally and as expected.
You will need to go into the Watch app on your iPhone and start deleting/thinning out stuff off of your Watch.
Like any apps you do not really use, stored music/podcasts, any stored photos/images, unused watch faces, etc., to make extra internal data storage space inside of your Watch to be able to get enough room to perform a watchOS upgrade/update.
Good Luck to You!
