It appears that it is a bug. You shouldn't have to remove it from iCloud based on the manual. Here is the text from the manual on this subject:
Sell, give away, or lose Apple Watch
Before you sell or give away your Apple Watch, be sure to unpair it from your iPhone anderase its contents. If your iPhone and Apple Watch are fully functional and connected, you can accomplish this just by unpairing the watch. If your Apple Watch is lost or stolen, you can remove any credit or debit cards associated with it.
Unpair Apple Watch and iPhone. Open the Apple Watch app on iPhone, tap My Watch, tap Apple Watch, tap Unpair Apple Watch, then tap Unpair [watch name]. The Apple Watch is also removed from your iCloud account.
So, the seller did nothing wrong it appears if it was unpaired. Must have been a glitch.
I think that may be from an older manual, describing how things worked in Watch OS1, which didn't have activation lock.