Updating an Apple Watch Series 3 is a nightmare in 2021
theverge.com
theverge.com
I wouldn’t buy a Series 3 today, as mentioned in the article: the price diff isn’t significant. Though updating the watchOS wasn’t such a bad experience as the author described it. Feels a bit like a rant post.
The probable explanation is that you have AW S3 Cellular model (which comes with 16Gb).
Usually it's next to impossible to update AW S3 (available at Apple Store) since it only has 8Gb without unpairing and resetting as the OS quickly builds up caches/system files which can't be removed by the user.
Hence, even if you didn't load anything (no apps or music, for instance), you'll have to go through the whole process.
>>> If you have Apple Watch Series 3, skip directly to the steps to unpair and update your Apple Watch [1].
Notice how Apple tells the users "don't even bother trying to clear up the storage" and directs to the unpairing process straight away.
Apple's decisions to be exceedingly stingy with storage will bite them in the long run as the security of their ecosystem comes into question due to devices that don't have enough storage to update.
The added costs of flash, for holding say 2GB in reserve for system updates, are miniscule.
However, I agree that not being able to update because of disk space is more bothering to most people than not being able to update because, well, there are no updates [for this specific device].
That said, small storage used to cause all kind of problems in Androids too (in particular Sony Ericsson devices). IIRC it also caused some issues for Windows Phones updating from 7 to 7.1 to 8 and finally 10.