Yeah, the original Apple watch had like half a GB, and a raspberry pi zero ($5 price) has the same. Couldn't they have fit that within both budget and size?
Oh they could have. The problem is: it's extremely hard to get access to powerful SoCs - the vendors simply won't work with you and most of the documentation is under NDA.
That's a really good point. I remember having the Pebble watch (this was pre-Apple and Android watches) and I think it had 128 KB of RAM total, including OS, background tasks, apps, etc. That was a mass produced and commercialized item though.
Granted that was an e-paper display. (They had color and black and white options)