No, I don't think they're being distributed solely on the time they were ordered either (whether the time of order or the time stamped on the acknowledgment email). Whatever method Apple is using to push available product out the door seems completely unable to be nailed down, and Apple (as usual) won't talk.
Someone earlier in the thread indicated they had ordered the exact same watch I have (38mm SGS w/ BSB), with a confirmation email showing one minute after mine... and their order has moved out of Processing. Mine still remains in processing. My account hasn't been billed. I've seen ZERO movement on my order since it was confirmed at 12:16am Pacific Time on 4/10. Yet others who ordered after me are getting their Watches. So it isn't strictly "in the order received".
Just like preorders weren't prioritized when a considerable number of Watches made their way to the boutique stores in 5 countries while preorders sit waiting to be fulfilled. If those Watches were available, they should have gone to the preorders first, as that's the guaranteed money.
And Apple's ongoing silence (or the evasions in the very few nebulous statements the press has been able to pull out of them) only exacerbates the issue.
Apple has screwed this launch up big time.