Indeed.
That would make it a stocking filler. I think the problem is that most people simply don't have a problem with getting notifications on their iPhones, and health and fitness only attracts a very small audience.
As others have said, I am skeptical that wearables will ever take off. It's not really attractive having a cold, hard mechanical object chained around you the whole time.
It's not for everyone, but I have found the watch far more useful than the notifications and health and fitness you mentioned. Not that I don't appreciate using the watch for workouts, as I've found it a great tool during workouts. I was happy to see I get a better cardio workout shooting hoops than using the treadmill. Needless to say, I pass by the treadmill on my way to the courts at the gym.
Even when I have the phone nearby, the watch is just more convenient to use for a number of things. Especially useful when I'm working outside, and the phone is nearby, but not "on me". Or when my hands are muddy/dirty, and I want to respond to a call, or other event. Ignoring the dirty hands issue, it's actually easier to pick up a call (or initiate one) from the watch. And using the watch to open the front gate when it triggers a text message to let someone in, is quicker and easier than it is from the phone.
Something I found particularly useful, which I've never heard others comment on is the turn by turn directions. Relied on it extensively when walking unfamiliar areas in Europe where pick pocketing is a big problem - wallets & phone stashed away, while getting the silent tapping cues from the watch.
Could I live without it, .. sure. But, all the little conveniences add up, and make it worth it for me - The one benefit that's not immediately apparent until you have the watch, is the signicance that it's always there and easy to get to. Not always the case for the phone.
Again, not for everyone, but it's capabilities are underestimated - mostly by people who don't own one.