why my Apple ID cannot be used to unlock this Apple Watch
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Because it is locked to another Apple ID. Activation Lock prevents lost or stolen devices from being used by other people.
M1 Mac mini, macOS 11.5.1; Watch, series 5 GPS/cellular, watchOS 7.6.1; iPad Pro 2nd Gen, iPadOS 14.7.1; iPad Air 2, iPadOS 14.7.1; iPhone 12 Pro, iOS 14.7.1; TV 4th Gen, tvOS 14.7 HomePods, audioOS 14.7 and Airport Express w/ Airplay 2