Try cleaning the back with a little bit of regular hand soap under the faucet with a very low pressure water stream and see if it might just be dirt on the outside. It does look water damaged from the photo you shared. But it's hard to tell if it's on the inside.
The unfortunate truth is all Apple Watches except the Ultra are merely water resistant meaning that they are only tested for static water pressure at a shallow depth. If you keep your watch on in the shower or when swimming the pressure can fluctuate and overpower the seals.
And contrary to how Apple handles it on the Ultra the water damage is classified as accidental damage and you need to pay the replacement fee which is very low with the Applecare insurance. The Ultra is considered water proof with a much better rating so showering and swimming with it isn't a problem. That's why Apple usually switches out water damaged Ultras at no cost within the regular warranty. They advertise the Ultra as such even claiming it's perfect for diving whereas they do not advertise diving on any other watch.
Furthermore, the water resistance can and will fade over time. It shouldn't on a year old Series 9 but there's no guarantees. They carefully word it on their website simply stating water resitance isn't a permanent condition.
The good news is if you ever get a watch battery replacement straight from Apple they switch out the entire watch for a good as new one that has fresh seals and will be fully water resistant again, or in the case of the Ultra, water proof for swimming.