Cell service vs hotspot

In the U.S. it is $10 added to the iPhone’s cellular bill. The cellular carrier must support the Apple Watch. Not all carriers do.

A GPS Only Apple Watch can do everything the cellular model can do as long as your iPhone is nearby.

If you own a GPS+ Cellular watch and you don't want to have your iPhone with you constantly, then you need to set up a cellular plan with your iPhone cellular provider, assuming they offer a cellular plan for Apple Watch. Otherwise, you can use either a GPS+ Cellular Watch as a GPS only watch, but your cell phone must be nearby for the watch to function for messages, email, phone calls, etc.