How iPhone and Apple Watch always know the correct and exact time?
Time of all iDevices
The iPhone gets the time from different places. It can get time information from your carrier, and Apple servers over the internet.
A GPS + Cellular may use the same time servers from Apple and your carrier as well, and it will also sync the time from the paired iPhone if the other 2 are not available.
Get help with the date and time on your iPhone, iPad, and iPod touch - Apple Support