Should I charge Iwatch every night or let it drain down low?

Yes you should charge it every night and use Optimized Charging. This will learn your charging behavior and is best suited for regular charging overnight to get the best performance out of your battery. Some watches have the 80% limit along with Optimized Charging, but I recommend just sticking with Optimized Charging and not using the 80% limit if you have that option. For more information:

About Optimized Battery Charging on your Apple Watch - Apple Support

The worst thing you can do to a Li-Ion battery is to totally drain it.

By not charging it every night, you run the risk of being too late, too many times, running it to zero and eventually ruining your battery.