Apple Watch Displays the Wrong Time

It sounds like you are more curious about what's going on, but not really concerned about it. Kind of a "It is what it is".

Like your wife, I prefer to stay on my local time and I have my phone set accordingly.

I'm just moving up the ranks and probably won't have the expert reply that the more experienced community members will have. This is one thing that the more experienced users will say, "You need separate iCloud accounts", but you both are fine with how things are currently and it clearly works for you both.

Based on this paragraph, "We share an iCloud account so I might conjecture her watch is getting its time from my iPhone when it can only see that device."

I'm curious if this watch has also been paired with your iPhone? If so, then I believe that you're probably correct in your thinking. If it hasn't been paired with your phone, I wonder if the watch is using your phone as a "crowdsource".

Have a good trip home ;-)

Something dawned on me after the fact and too late to edit my post... A watch can only be paired to one phone. That throws a wrench in one of my questions earlier, lol.

However, a phone can be paired to more than one watch at a time. I momentarily had it backwards.

On another note, you can clean up the list of 'past' devices by removing them from your iCloud.

Here's some information pertaining to that:

What to do before you sell, give away, or trade in your iPhone or iPad - Apple Support

Have a great week :-)