Yes, battery life on all models of Apple Watch will deteriorate over time.
The battery in Apple Watch is designed to retain up to 80% of its original capacity after 1,000 complete charge cycles. Apple's Limited Warranty includes coverage for defective batteries. Out-of-warranty battery service is also available:
Batteries - Service and Recycling - Apple
Apple's tips for maximising battery life and lifespan on Apple Watch are detailed here:
Batteries - Maximizing Performance - Apple
Note that charge cycles are calculated cumulatively. Apple advises that you can charge Apple Watch whenever you want. The battery on Apple Watch cannot be overcharged and there is no need to let the battery discharge to any particular level first, nor any benefit to be gained from doing so:
Batteries - Why Lithium-ion? - Apple