My read from the linked timeline is that Apple didn't block Spotify from the Apple Watch, but rather wouldn't provide the API necessary to Spotify for offline-mode.
I inferred this from the vague wording in the earlier points and the clarifications in the later points.
> When Apple launches their new Apple Watch, they dismiss our proposals and won’t work with us to develop an app for it.
Notice, they didn't say they were blocked. Also why would building an app for the watch necessitate a proposal to Apple that requires Apple to work with them directly? Wouldn't you instead build your app and submit it for approval? This is probably because the Apple Watch SDK didn't provide all the functionality Spotify wanted, and so Spotify was trying to get Apple to add new functionality to the SDK.
> We submit a new proposal for a streaming app directly on the Apple Watch. Apple declines
> With WatchOS 4, Apple continues to make it challenging for us to deliver a workable streaming solution for the Apple Watch
Again, doesn't say they were blocked, just that proposals were rejected and the provided functionality made it difficult/impossible to do what they wanted.
> With Watch OS 5, Apple allowed the Spotify team to start developing offline functionality
Was this the functionality Spotify was proposing for Apple to make possible all along? In other words, was this the missing part of the SDK that Spotify had kept proposing to Apple and having rejected (not the app itself, which they didn't want to build without this functionality)?
EDIT: I'm also not saying they didn't build the app and submit it and have it rejected. They just never actually say that in the timeline.