Sold my Apple Watch and they cannot get it set up. Guessing I’ve got activation lock on but I reset the phone and unpaired it. I no longer have possession of my watch. How do I get them access to be able to set it up fresh for them?

Hello ~ Take a look here:

before you sell, give away, or trade in your Apple Watch*

*If you already gave away your Apple Watch, you can erase and turn off Activation Lock from iCloud.com. Here's how:

1. On a computer, go to Find My iPhone on iCloud.com and sign in with your Apple ID. 
2. Select All Devices, then click your Apple Watch.
3. Click Erase Apple Watch. Select Next until the device is erased.
4. Click the X button  next to your Apple Watch. 

Learn more about Activation Lock. 

~Katana-San~

You can ask apple to remove the activation lock online on this page;

Remove the Activation Lock Here.

Or this;

If you can't remember/gain access to the apple id that paired the watch to the phone.Take the watch and it's receipt with the serial number along with some photo id and any other proof of ownership to an Apple Store and request that they remove the Activation Lock for you.