The idea is to allow Apple Watch apps to have a wide range of features without killing battery life. With his arrangement, the watch can do pretty much anything an iPhone can do. There are hundreds of millions compatible iPhones so it's not a huge restriction.
And, of course, pretty much anyone buying this would be carrying around a phone in any case.
Of course, a standalone watch would be better.
Well if it does help for the watch battery by doing this ... I REALLY hope that it goes more then 1 day on a full charge ...