charging

If it is actually charging, the first (and simplest) thing to try if something isn’t working right is to restart your Apple Watch and its paired iPhone. If necessary (device not responding), try a forced restart. Both methods can be found here:

How to restart your Apple Watch - Apple Support

Restart your iPhone - Apple Support

If that doesn't help, the next steps would be to unpair and pair your watch again and restore from the backup just created. This should result in no loss of data. It deletes all temp and corrupted files and re-indexes the file system.

Unpair and erase your Apple Watch - Apple Support

Set up your Apple Watch - Apple Support

M1 Mac mini, macOS 12.0.1; Watch, series 5 GPS/cellular, watchOS 8.1; iPad Pro 2nd Gen, iPadOS 15.1; iPad Air 2, iPadOS 15.1; iPhone 12 Pro, iOS 15.1; TV 4th Gen, tvOS 15.1; HomePods, audioOS 15.1 and Airport Express w/ Airplay 2

No, this is not a process that erases your watch.

It is a reboot, but different than turning the watch off and then back on.

No, this is not a process that erases your watch.

No, you will not have to set it up again.