I think a lot of people are forgetting that this is quite different territory for Apple - when Steve Jobs returned to Apple he famously made Apple trim down the offerings/models for each product to a small, selected number of options. This time around there's 10 Sport models, 20 Watch models and 8 Edition models - each in two sizes. That's 74 different models of the product. A watch is a different prospect than a computer though, which is why I think there's so many options - but still, it's new territory for Apple.
You could reasonably argue that there's actually only 12 different "watch" components (2 finishes in each of the three editions, and two different sizes of each) - but each of those will require different production lines, or production lines to be switched for each.
Packaging, logistics, etc then need to be managed to get the 74 different retail SKUs.
At this stage, with a new product, how many of each to make is an educated guess. Sure - they can use data from people favouriting watches, but this is still only a guess (and this has only been available for a few weeks).
As others have said there's stock and storage logistics issues too - you make a product, you have to ship it somewhere before it goes to store/to us as customers. If you allow it to go to store then you're taking up store space for a product that isn't launched so that space can't be used to stock products that are currently selling. If you let it go to customers, then you've launched and are selling.
The only option - pre-launch - is to use a warehouse or storage. Now most warehouses that are available will have minimum leases. Once you launch, your stock will flow more freely so you probably won't need all of that storage space.
So, unfortunately, the only viable method for any product becomes making what you can to fill available storage space, launch, ship to stores/customers, and then continue with your production runs.
Popular models will run out more quickly. We've seen it with iPhones (and games consoles, etc). When you add 74 different models to that mix, where only an educated guess can be taken as to which models to manufacture and what quantities as this is a new product.
I think saying that Apple (or any company) purposefully hold back stock is kinda naive. It would cost more in storage (not just for now, but then with excess storage capacity that wouldn't be needed/used once products are past launch), it risks losing customers to rival products, etc. The situation is simply one born of logistics.