How far away will the Apple Watch work from the iPhone?

As Jeff mentioned, 30-40 feet (10-15 meters).

But then if WiFi is available, it may continue to connect with your iPhone.

If you have a cellular model AND you have activated the cellular service on the Apple Watch, then as long as both devices can talk to the Internet, they can communicate.

NOTE: SMS/MMS TEXTing REQUIRES that your iPhone be powered on, able to connect with the Internet and be logged into iMessage. SMS/MMS TEXTs are handled by the iPhone and relayed to the Apple Watch via iMessage over the Internet.

If you have a GPS only Apple Watch, or have not activated the cellular radio, then the Apple Watch will collect exercise stats, tell the time, play audio pre-stored on the Apple Watch. Collected data will be synced back to the iPhone when they are near each other again.

Use your Apple Watch without your iPhone nearby - Apple Support

Work in what way? Apple Watch functions independently of iPhone in many instances. What specifically are you wanting to know?

Much of the communication is over Bluetooth (low battery consumption) but that typically limits range to about 30 to 40 feet (line of sight).

What version Apple Watch and iPhone are you using? Different combinations typically have different versions of Bluetooth and communicate at lowest common denominator for speed and distance.