what do I need to do to prepare my Series 1 Apple Watch for giving it to someone?

Hi

To prepare your Apple Watch for giving it away or selling it, unpair it from your iPhone using the Watch app whilst your devices are connected via Bluetooth.

This will erase all content and settings from the Apple Watch and also remove Activation Lock, leaving the watch ready for a new user to set up and use as their own:

Unpair your Apple Watch and iPhone - Apple Support

If you cannot unpair the devices via the Watch app, then instead follow the instructions in the final section of this support article:

About Activation Lock on your Apple Watch - Apple Support

Hi johnfromfarmington hills,

Turn off Activation Lock before giving your Apple Watch away. See the following article for guidance.

About Activation Lock on your Apple Watch

https://support.apple.com/HT205009

All the best.