Type 1 diabetic here, weighing in. I currently wear a Dexcom continue glucose monitor and use an insulin pump. I'm going to assume that this Apple Watch would work well enough to make medical decisions -- e.g., do I give myself insulin based upon the glucose reading from my Apple Watch?
Although this would be a very welcome feature, I do not see it replacing my Dexcom CGM.
First, I cannot even tell that I'm wearing a Dexcom CGM, and it's connected 24 hours/day. This means I have blood glucose data all the time as long as I'm within Bluetooth proximity of my iPhone. (Unfortunately, the readings don't go directly to the Apple Watch yet; the iPhone remains an intermediary). This is a big deal -- when my blood sugar goes too high or too low when I'm asleep, I receive an audio alarm, even when my iPhone is charging by my bed. It's awesome. I do not want to wear an Apple Watch 24/7 or while I'm sleeping to achieve this.
Second, you have to take off an Apple Watch to recharge it, and during that often substantial time, that means I would receive no blood glucose readings. Apple Watches do not recharge very quickly, so no blood glucose readings during that time.
Setting that aside, the benefits cannot be minimized.
First, Type 1s like me hemorrhage cash just to stay alive. Insulin vials (2-3 per month at $300/vial in the US), transmitters and sensors for continuous glucose monitors, and insulin pump supplies are EXPEN$IVE. It's shocking. A one-time payment for an Apple Watch is a bargain compared to $125 (roughly) for a Dexcom sensor that lasts only 10 days. The price savings would open up the benefits of continuous glucose monitoring to so many diabetics who could benefit.
Second, I would love to be able to leave my iPhone behind when I go running or partake in other outdoor activities. Wearing only an Apple Watch, I could keep an eye on my blood sugar, and still have the benefits of music and communication. That would be killer.
Definitely a step in the right direction, though.