wrong passcode requiring unlocking watch with iphone

Hi

Follow these steps to erase your locked Apple Watch and re-pair it with your iPhone:

• Connect your watch to its charging cable, connected to power.
• Whilst keeping your Apple 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), release your finger, tap on Erase all content and settings and confirm when prompted.
• Re-pair your Apple Watch using the Watch app on your iPhone, choosing to Restore from Backup if offered the option.

More information:

Set up your Apple Watch - Apple Support

If you forgot your Apple Watch passcode - Apple Support

The recommended solution certainly does work.

Be sure to follow the steps as specified in my reply, including connecting your Apple Watch to the charger, connected to power and pressing and holding only the side button, not also the Digital Crown:

A quick look at Apple Watch

The recommended solution to hold side button until power off comes on doesn’t work. It keeps resetting. I did not change my password but watch is telling me the password doesn’t work. This happened after software upgrade to watch.