Apple Watch Ultra suddenly always on in Nightstand Mode

To rule out a software issue, erase the watch and pair it again, setting it up as a new device. You will only lose your created Watch faces and may have to activate the cards in your Wallet app again.

Then test the Nightstand mode again.

Unpair and erase your Apple Watch - Apple Support

have you tried to restart it?

Restart Apple Watch – Apple Support (MY)

You're welcome 🙂