I should have clarified in my original post that I do have a playlist set up under Watch > Workout > Workout Playlist (playlist is names "Workout") and it's set to Shuffle.
The AirPods are connected to the Apple Watch - I've explicitly gone into settings on the watch and made sure that the AirPods are connected. I'm not really sure if the AirPods have to be connected directly to the watch or to the iPhone because it seems to work interchangeably, but like I said, I've been explicitly pairing the AirPods (Pro, gen 1) to the Apple Watch (Ultra). If it matters the watch has an e-SIM in it but I still take my phone when I hike/run.
Some additional info that I don't think matters, but just for completeness; I have the Action Button set to Action: Workout, App: Workout, First Press: Hiking Open Goal.
This is how I start workouts usually, but I've tried starting the workout by selecting the Workout App, then Selecting Hiking, etc and the behavior is the same, as in the playlist doesn't start.
Additional behavior update:
I updated my phone to 16.2, and the watch to 9.2, and the playlist still doesn't start automatically - I just did a full test this morning, but interestingly in the workout app, if I swipe to get to the Music screen once I start the workout and manually play the playlist, it plays and I get the Voice Feedback for heart rate, splits, time, etc - the music fades, the announcement is played, then the music fads back up. This was not working prior to the update to 9.2, and is the important part, but since it's cold out and I'm wearing gloves I really want the autoplay to function so I don't need to fumble with stuff on the trail.
Thanks for any assistance.