Jonathan -
Respectfully, that's not correct.
I've found that I can get up from my "Sitting Desk" and do several minutes of house cleaning - moving coffee mugs to the sink, emptying trash baskets, etc. - and if I don't "drop" my left arm so it's hanging by my side, I can clean for all 10 minutes and it simply won't give me that credit. However, if I get up, carry the coffee mugs and glasses to the sink with my hand down by my thigh, I get my "Stand" credit almost immediately. That was the huge "Ah ha!" moment this morning - I knew if I walked to the back yard and then back inside to my office I got credit, but if I did far more standing and moving and didn't drop my arm to my side I got squat.
Apple may say it works as you've described, but the empirical evidence says that it doesn't work that way at all. You are welcome to try an experiment - grasp a glass or mug (or something else), and with your Watch forearm parallel to the ground, stand up and move about. You are free to swing your free arm however you may like, and you're free to walk or whatever else you might like to do while standing. Time how many seconds it takes for you to get your "Stand" credit. Do this several times. Now, repeat the process, this time with the glass or mug (or whatever else) in your other hand, allowing your Watch arm to swing freely by your side as you move about. Time how many seconds it takes for you to get your "Stand" credit.
If there is a significant time different - and my experience indicates that there is a HUGE time difference, including "Never" - it means that the "Stand" detection software is BROKEN.
As I said, please feel free to conduct this experiment for yourself and report your results back to the forum.