To expand on my previous reply:
Calibrating the watch helps it to recognise arm movements that relate to walking (and running) and also to better estimate distances that you have covered when taking steps at different speeds. This may therefore also help it to better recognise when you are not walking or running.
It learns by combining knowledge of your arm movements (using data from the watch's accelerometer) with knowledge of pace and distance (using the Location Services / GPS feature on your iPhone).
Calibrating your watch can improve the accuracy of steps and other estimations in the Activity App.
If you have already had your watch for a while, it may help to reset your calibration data and start afresh:
On your iPhone, in the Watch app, go to: My Watch (tab) > Privacy > Motion & Fitness > tap on Reset Calibration Data.
To calibrate again, follow the instructions in the support article below, including:
- Record Outdoor Walk and/or Outdoor Run workouts using the Workout app on your watch.
- Do this for around 20 minutes at each of the speeds at which you normally walk or run.
- Whilst doing so, take your iPhone with you, with Location Services turned on.
- Allow your arm to swing naturally during the workout.
More information:
Calibrating your Apple Watch for improved Workout and Activity accuracy - Apple Support