This bug occurs regularly on my Series 6, watchOS 7.6.2.
Often during training sessions (very weird: training time still gets updated every second, while daytime often lags behind several minutes). But sometimes also on main watch face.
So this is not something which happened in the first versions of watchOS 7 and has been fixed afterwards - this bug is persistent and renders the always-on function almost completely useless, even in the last version of watchOS 7.
Restarting the watch seems to fix it first, but that's not true - it always re-appears again. Sometimes within hours, sometimes days, but the misbehaviour remains.
I think it's absolutely inacceptable that this problem even made it into watchOS 8. From my point of view, this is a core feature which has to work reliably - otherwise it is not at all possible to rely on Apple Watch as a timekeeper.