What happens to Apple Watch if I erase iPhone contents

Hi

If you wish to factory reset your iPhone and also to retain your historic Health and Activity data (which is stored on your iPhone, not on your watch), then follow these steps to 1) unpair your Apple Watch, 2) make an encrypted back up of your iPhone, 3) restore your iPhone to factory settings (with a fresh copy of iOS) and then 4) re-pair your Apple Watch:

• Unpair your Apple Watch via the Watch app, with your devices connected via Bluetooth:

  Unpair your Apple Watch and iPhone - Apple Support

• Make an encrypted backup of your iPhone.
  • This is very important, in order to retain historic Health and Activity data.
  • iCloud backups are encrypted as standard.
  • When backing up using iTunes, backups are only encrypted if the option to "Encrypt iPhone backup" has been selected:
  • How to back up your iPhone, iPad, and iPod touch - Apple Support
• Restore your iPhone to factory settings (installing a fresh copy of iOS) via iTunes on a computer:

  Restore your iPhone, iPad, or iPod to factory settings - Apple Support

• Restore your iPhone from the encrypted backup:

  Restore your iPhone, iPad, or iPod touch from a backup - Apple Support

• Re-pair your Apple Watch, choosing to Restore from Backup or to set up as a new watch during set up:

  Set up your Apple Watch - Apple Support

YES

I would unpair the watch before a complete reset.

but have you tried a complete reset and restore from backup first. That will restore your apps and data?