Apple Watch does not track exercise

If it comes to Indoor Walks, there is no GPS signal to compare your changing positions during the walk on the treadmill.

According to the Apple Watch Support article, in that case, the watch should be calibrated outside while taking an Outdoor Walk workout, to give you better results.

Calibrate your Apple Watch for improved Workout and Activity accuracy - Apple Support

The distance for an Indoor Walk is being measured by the movement of your watch arm, counting the steps you make, and converting this step count into distance. If your arm is moving faster, more steps will be counted and the measured distance will go up. Adjusting the rhythm of your arm going back and forth is the only thing you could try to match it to the shown distance on the treadmill.

Which false information is your watch showing, when you recored an Indoor Walk on your watch?

Or is it missing additional data like heart rate, for example?

Without knowing any more details it is hard to figure out the issue.

My Ultra 2 is almost in sync with the data displayed on the treadmill, maybe off by 20 meters in distance when a 5k is being recorded.

This is the result shown after the 1-mile test Indoor Walk.