Open the Settings app on your Apple Watch
Tap General
Tap Reset
Tap Erase All Content and Settings
Enter your passcode if prompted
If asked, choose to keep or remove your cellular plan
Confirm the erase action
Wait for the Apple Watch to reset and restart
Alternatively, open the Watch app on your iPhone
Tap My Watch
Tap General
Tap Reset
Tap Erase Apple Watch Content and Settings
Confirm the erase action
If needed, unpair the Apple Watch from your iPhone first
Keep the Apple Watch on its charger until the process is complete