Hot to touch is generally a bad sign and indicates a big drain on the battery - lots of maxed out processing. However, this might be a problem only while applying the software update. I have noticed my Apple Watch got much warmer than I expected when I installed a new WatchOS recently, but it is perfectly normal after the install completed.
If it is still hot, give it a forced reset (reboot), then maybe see if you can shut it down and let it cool before you put it on charge for an hour or two. If that doesn't solve the problem then you should certainly be talking to Apple Support as my earlier post.