Open the Settings app on your Apple Watch
Tap General
Scroll down and tap Reset
Tap Erase All Content and Settings
Enter your passcode if prompted
Confirm by tapping Erase All
Wait for the watch to erase and restart
If your watch is paired and you want to unpair it from iPhone: open the Watch app on iPhone
Tap All Watches
Tap the info icon (i) next to your watch
Tap Unpair Apple Watch
Confirm Unpair
If prompted, enter your Apple ID password to disable Activation Lock