First of all, DIGITS is free. I'm using it for free, and the T-Mobie web site says that every phone number on T-Mobile gets free DIGITS.
T-Mobile uses the moniker DIGITS as an umbrella for several services that allow you either to share the same number among other devices or to add a calling and texting capability to devices like tablet, computers, etc. This is also free as long as you want to share a number that's already assigned to your T-Mobile phone SIM, and as long as other devices utilize either Wi-Fi or non-T-Mobile cellular data connection.
There's also another service under the DIGITS umbrella; this service is to "share a line" with the phone that has no SIM from another provider in it and has no data connection. Such a phone normally doesn't have a calling or texting capability unless it's on Wi-Fi and has the DIGITS app installed. However, this last service allows you to get a SIM from T-Mobile and use the same number that you are already using on a full-fledged T-Mobile SIM in another phone. So, this service costs $10 for each such SIM but it comes with data speeds of 500 kbps. This is EXACTLY how T-Mobile is making the LTE Apple Watch able to make and receive calls. T-Mobile uses the LTE Apple Watch's E-SIM and the Apple Watch magically starts sharing calls and texts with the iPhone. It's basically another phone with no SIM from any provider, and T-Mobile gives you service with unlimited calling and texting and unlimited data at 500 kbps, but you don't get a separate number for this "phone" aka LTE Apple Watch.
The ability of the Apple Watch to receive and make regular cellular phones are done via DIGITS on T-Mobile, just as it's done via NumberSync on Verizon and NumberShare on AT&T.
The 500 kbps data speed is a bummer, and I think T-Mobile needs to change this, but right now, this is a standard offering with DIGITS and it applies to any device; not just Apple Watch. Additionally, I'm not sure that Apple Watch needs more bandwidth than 500 kbps.
And NONE of this has ANYTHING to do with tethering.
https://www.t-mobile.com/offers/t-mobile-digits