Apply watch

To use your Apple Watch Series 3 or later with watchOS 7, you need to pair your Apple Watch with an iPhone 6s or later with iOS 14 or later. Setup assistants on your iPhone and Apple Watch work together to help you pair and set up your Apple Watch.

To avoid injury, read Important safety information for Apple Watch before using your Apple Watch.

https://support.apple.com/guide/watch/set-up-and-pair-your-apple-watch-with-iphone-apdde4d6f98e/watchos

To unpair and erase watch and remove Activation Lock.

On a computer, go to iCloud.com and sign in with your Apple ID.

Go to Find Iphone.

Select All Devices, then click your Apple Watch.

Click Erase Apple Watch.

Select Next until the device is erased.

Click the remove button next to your Apple Watch.

Then go here;

And now to pair the watch with my phone.

According to that screenshot the watch is paired to something.