There are several reasons why you should consider using a passcode on your Apple Watch. Without one, you won't be able to use Apple Pay to make contactless transactions using the device, nor will you be able to use it to automatically unlock your Mac.
But apart from losing out on functionality, not using a passcode on your watch means that anyone who got hold of it could potentially gain access to your Health and other app data, and possibly more besides.
Using a passcode on your Apple Watch isn't like having one on your iPhone or iPad, because you don't have to enter it every time you use your watch. You'll only be prompted for it if you remove your Apple Watch from your wrist or if the watch is restarted. Also unlike iOS devices, if you ever forget your Apple Watch passcode, there are steps you can take to regain access.
With those benefits in mind, here's how to set up your Apple Watch passcode.
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Article Link: How to Add a Passcode to Your Apple Watch and What to Do if You Forget it