Sapphire is the 2ed hardest material known.
This isn't actually true, but is at risk of becoming "common knowledge" based on how frequently it's being repeated.
If you're talking "mineral" materials, sapphire would probably in 3rd place, not 2nd. And if you're talking materials in general, there are a bunch of other materials that rank higher in hardness. Some are fairly exotic, some are as commonplace as silicon carbide.
Where sapphire ranks in 2nd place is in the category of
transparent (visible light range) materials. Important caveat. Turns out there are a bunch of things that can conceivably scratch that watch face, they just happen to not be transparent objects!
In general, I wouldn't worry much about your sapphire crystal scratching under normal conditions, for most people. Obviously YMMV depending on what kind of stuff you get into in your line of work or your hobbies! Sapphire comes in at about 9 on the Mohs hardness scale. There are a bunch of things that are at or above that level. Your corundum-studded sandpaper from Lowe's can very conceivably scratch that surface, given the right application. But again, for everyday use for most people, it's far beyond adequate scratch resistance.
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"Composite" is just a fancy way of saying the Watch Sport has a plastic back.
Since they're calling it composite, that at least indicates that it's not just some injection-molded piece of plastic junk. A composite is multiple materials combined together in such a way that they essentially function as one. Typical forms are particles or fibers embedded in a surrounding matrix, or a laminar stack of alternating materials. Two examples of composites are CFRE (carbon fiber-reinforced epoxy) and GFRE (glass fiber-reinforced epoxy), which most people usually just call "carbon fiber" and "fiberglass," somewhat erroneously. This composite plate on the watch is probably some sort of fiber- or particulate-strengthened polymer, and I imagine it'll still be around in one piece long after we're all cold in the ground.
I agree with you that the material used for the back plate is perfectly up to the task, and will not be the ultimate source of failure or breakdown in this design. The ceramic back found on the higher end watches probably has a more premium "feel" but functionally I can't imagine there's any advantage.