Here's a followup to this bizarre story... Yesterday I went to the Apple Store after they called me to say they had a replacement watch ready. So i followed thru with the swap, and I said, I better check this in store, make sure my apps sync up fine.
Lo and behold, new watch, no user installable apps launch, including the Apple Store app.
They had me do resets, re-pairs, setup as new, restore from backups, all sorts of steps, i sat there for 2 hours, still nothing... I said, hey, why don't you (the genius) pair this watch to your phone. He said sure lets do it. And go figure, after a quick setup, the apps work on his phone. So we un-pair it, and I try it again from my iPhone 8. Nothing, apps don't launch...
I'm ready to throw this thing against the wall, an apple guy who wasn't even helping me directly says you should restore your iPhone to factory and then restore it from backup... I roll my eyes, because the phone worked fine with my S3 watch, and all the apps worked fine...
But since I don't do iCloud backup, I said I will have to try this at home, do an encrypted iTunes backup, so i don't have to readd all the apple pay stuff and re enter all my passwords...
So when I got home, I un-paired the watch, set it on its cradle to charge, and proceeded to back up the iPhone 8. After that, I forced it to DFU mode, to make sure it would reload iOS from scratch. After that was done, I restored the phone from my latest backup, and after that, I paired the watch, and whaddya know, the apps now launch on the watch.
I really feel let down by Apple and their troubleshooting, both on the phone and in store, as I had wasted time on the phone, a total of maybe 5 hours in the Apple Store, and it was the final suggestion of an Apple employee that wasn't even helping me (I'm not sure he was a genius or not) that turned out to be the correct solution.