Apple Watch stopped unlocking MacBook Pro - Sonoma

I did some searching in these boards, couldn't find a solution to my issue: My Apple Watch stopped unlocking my MacBook Pro - Sonoma 14.4.1

I tried the obvious first, went to System Settings and tried to reset the setting. It wouldn't allow even after putting my system pw in. I restarted the laptop and watch multiple times. Tried logging in/out of my iCloud/AppleID, no change. I just happened to notice the setting in System Settings had my watch as "Apple Watch" not as I had had it in my iPhone/Apple Watch setting - which was my name in front of Apple Watch. Once I changed my iPhone to show it just as "Apple Watch" System Settings automatically had changed to "On."

So, my question is: what changed, why did it change? It's not something I did. But my MacBook Pro's Apple Watch setting to unlock my laptop changed the watch's name from what it had been in my iPhone...as I had originally set it months and months ago. No system updates on the computer or watch recently.

The unlocking the MacBook Pro by the watch is convenient, but the TouchID does the same thing.

Any ideas why the watch's name changed in the MacBook Pro's System settings to different than in the iPhone/Apple Watch's name?

Tom