Yes, I've spent quite a lot of time figuring it out.
Basically it's a second hour hand for the local time zone. However it completes one 360 degree sweep in 24 hours, as opposed to 12. It will be pointing straight up at midnight your time, and straight down at midday. You can count the hours using the markings on the bezel, you'll see there are 24 including the arrow located right at the top.
Now if you set a second time zone (e.g. tap the centre of the face), on the bezel where the red hand is you'll now see an hour indicator for the time in the alternate time zone. This will either be 1 through 12 if your Apple Watch is set to 12-hour time, or 0-23 if the watch is set to 24-hour time (you can change this setting within the Apple Watch app on iPhone --> Clock --> 24-Hour Time).
The bezel colour change then switches to the sun-rise / sun-set time in the location you have set.
If you don't want to set an alternate time zone you can still tap and set current location. This will have the bezel colour changes at the sun-rise / sun-set time and display the most recent completed hour in the location where you are. Tapping the centre and setting it to 'none', as you have in this photo, sets the bezel colour change to what you are seeing, e.g. 06:00 to 18:00, if you are reading the hour off the 24 hour outer bezel.