Have you actually tried this? I unpaired an Apple Watch correctly and it did not remove it from iCloud. As a matter of fact, I had a couple of Apple Watches that I returned because of problems with them. Because of this thread I went into iCloud and checked and every single watch I've ever paired my iPhone with DID NOT get removed from iCloud after unpairing. I have never used reset content and settings, only unpairing. There is a either is a serious bug somewhere or Apple documentation is completely wrong.
iCloud Listing != Activation Lock enabled
I should have been more clear: I'm not saying there isn't some weird error in iCloud device management, I'm saying that it has nothing to do with activation lock.
A. Yes and I have the same results, multiple watches
B. Just because it's in iCloud doesn't mean that it is Activation Locked, devices in that list that have activation lock will say: "Is this device missing?".
Edit: And actually, looking at my watches, only the watch which the Apple employee "Reset all Content & Settings" is still listed. The second watch, which we explicitly unpaired, is not listed.