If your Apple Watch is unresponsive when attempting to erase it, then it may help to first force restart it:
Remove it from the charger and hold both the side button and Digital Crown for at least 10 seconds, releasing them when the Apple logo is displayed.
Then follow these steps again:
- Connect your Apple Watch to its charging cable, connected to power.
- Whilst keeping your watch on the charger:
- Press and hold the side button until you see the Power Off slider.
- Press firmly on Power Off (do not try to slide it - just press down more firmly than a normal tap) and then tap on Erase all content and settings.
- Re-pair your watch using the Watch app on your iPhone, choosing to Restore from Backup if offered the option.
If the issue then still persists, then I suggest that you contact Apple Support (mail-in service may be available, if required), make a Genius Bar reservation or visit an Apple Authorised Service Provider, if recommended including in order to arrange for your Apple Watch to be checked and, if required, serviced:
Apple Watch Service Answer Center - Apple Support