Here is the deal.... Apple counts billions. They can (and will) throw tons of money at R&D for this device going forward.
The battery life, however, is outside the scope of Apple. They have no major background in battery technology. In order to get a massive battery life increase, we are going to need a breakthrough in battery technology. This will likely happen at a state university somewhere (think team of brilliant grad students led by some PhD) OR at a private sector company that specializes in battery tech. Outside of that, apart from increasing the capacity of the battery (making it bigger), all Apple can do is continue to develop the CPU and OS to be more power efficient, but there is only so much you can do with that.
Waterproofing can be done today. Why wasn't it? Probably planned obsolescence in typical Apple style. Could be as early as gen 2.
GPS can be done today. Why wasn't it? Probably due to a massive battery hit that it would be. Probably won't see this until that battery breakthrough I mentioned above happens, which could be tomorrow or ten years from now.
Sleep monitoring - can be done today. Why wasn't it? Probably just low on the list of priorities. Could be a gen 3/4/5 feature.
Twice as thin - have to make the battery smaller. Very unlikely until, again, the battery breakthrough.
Mostly always on display - could be done today with a few changes to the Watch OS code, but battery life will be impacted accordingly. Again, probably not going to happen until a battery breakthrough.
4x CPU performance - will happen naturally as CPU tech progresses. Probably 18-36 months to see this, think Moore's law.