If you set the watch to mirror the phone, when you have DND turned on during "Bedtime" it will act just like DND does, no calls, no notifications (unless on your favorite list and have it DND set to allow favorites) during the "Bedtime" hours.
If you do not set DND to come on with "Bedtime" I believe you get all your notifications, the phone just alerts you that it is bedtime, and uses it as a calculation to determine your % of desired sleep amounts.
If you set DND to be on it's own without "Bedtime" you will not get calls/notifications (except if you allow favorites) during the hours of DND. Doing it this way, you can not set it to "work day" vs. "weekend days" like you can, if you use Bedtime with DND.
Not sure if this helps. Since you posted this, I now use Bedtime to activate and deactivate DND so that on the weekends it leaves DND off.