Does Apple replace lost or stolen iwatch?

As a simple replacement, no.

But there's AppleCare+ plan with Theft and Loss service (in association with AIG) that can cover that, but should've been bought at the time or just right after you bought your device. Learn more here AppleCare Products - iPhone - Apple

No. Neither AppleCare nor AppleCare+ cover lost or stolen watches.

FYI, According to: the article you cited (in the 'How to buy' section), AppleCare+ and AppleCare+ with Theft and Loss are available only for:

• iPhone 12 Pro
• iPhone 12 Pro Max
• iPhone 12
• iPhone 12 mini
• iPhone 11 Pro
• iPhone 11 Pro Max
• iPhone 11
• iPhone XS
• iPhone XS Max
• iPhone XR
• iPhone 8
• iPhone 8 Plus
• iPhone 7
• iPhone 7 Plus
• iPhone SE

Oh, that's right! My bad! Sorry. I was with iPhone in mind, forgot the question was about the Watch.

Sorry again.

Hey, it happens to the best of us.