Hi
No, that is not a bug.
Apple Watch enables you to customise the music storage limit, whether defined by storage capacity (up to 2GB) or number of songs (up to 250 songs).
The information beneath the current Storage Limit indicates how much storage space remains available overall, which may be helpful to know when setting your limit for music.
The remainder of the 5GB capacity is used for other purposes, including photos and other user content.