With the iOS 14.6 and watchOS 7.5 release, Apple is requiring Apple Watch Series 3 owners to unpair and restore the watch while installing the latest watchOS update. The company is doing this because the GPS-only variant of the Apple Watch Series 3 only has 8GB of internal storage, which is not enough for installing an update.
Prior to watchOS 7.5 update, Apple Watch Series 3 owners were almost always prompted to delete media and apps from their watch to install an OS update. Apple is now simply asking users to unpair and restore their Apple Watch so that they can install watchOS updates on it. This is a time-consuming process, and it adds major friction to installing updates on the Apple Watch Series 3, which could frustrate a lot of users.
To install the watchOS update, unpair your Apple Watch and pair it again in the Apple Watch app on your iPhone.
Installing a watchOS update requires that your Apple Watch has at least 3GB of free space. With the Apple Watch Series 3 GPS variant shipping with around 5GB of free storage space out of the box, it is likely that most users are not left with 3GB+ of free storage space after installing all their apps.
The Apple Watch Series 3 was released by Apple in September 2017. The wearable is already showing its age and the limited amount of internal storage is not helping things either. If anything, it is likely that Apple will drop support for Apple Watch Series 3 with watchOS 8.