Storage Full Alert

To Free-Up Storage

For songs, see:

Remove music from Apple Watch - Apple Support

and for pictures, see the "Limit photo storage on Apple Watch section in:

Choose a photo album and manage storage on Apple Watch - Apple Support

To delete apps on your watch, see:

Delete apps from your Apple Watch - Apple Support

Also, try unpairing and pairing your watch again and restoring from the backup just created in the unpairing process. This deletes all temp and corrupted files and re-indexes the file system. This should result in no loss of data and in some cases can free a lot of storage.

Unpair and erase your Apple Watch - Apple Support

Set up your Apple Watch - Apple Support

Also see:

If you don’t have enough space to update your Apple Watch - Apple Support

FWIW, a lot of people have problems updating a series 3 watch due to insufficient memory. In some cases, unpairing the watch, completely erasing it, then pairing and restoring the backup will resolve the issue after an update. (Simply unpairing and pairing again may not work.)

Unpair and erase your Apple Watch - Apple Support

Also, see fireyjack's reply to:

Can't update her series 3 watch. - Apple Community