I use a wrist HR monitor to track my heartrate when cycling. There are two big differences in how the watch will need to be worn vs. what we keep seeing people doing in pictures.
First, you are not going to wear this thing pushed up against your hand. That is not the right place to wear a watch. That is something fashion photographers do to get the watch in view without scrunching up sleeves and such and as a side effect, it has become a trend. It's stupid. It makes the hand press on the watch when you use full range of motion. The correct place to wear a watch is about an inch up your arm past the bend of your wrist. The best gauge is to lift/bend your hand back as far as you can. It should not press up against the watch in any significant way. This will be necessary to get a good HR read.
It actually works better as you go up the arm. To get an idea of where a wrist watch is actually supposed to be worn, see http://cl.ly/aHAh and don't be put off by how tight that looks. I literally have a notch worn into my arm from wearing watches since I was a kid, like a tree grown with a rope tied around it or something. It's actually on there fairly loose at the moment.
And then as mentioned, the tightness will need to be enough that the watch doesn't move on its own. The HR monitor is working by photographing your blood flow and calculating heart rate by monitoring the differences in these photographs. It shines a green light into your skin and uses simple photo sensors to measure density. Of course, if the watch is moving around, it's going to mess up that comparison and thus give you bad readings.
Another reason to keep it against your skin is to get the taptic engine feedback. This shouldn't be undervalued. It's going to end up being one of the best and most innovative watch features vs. other brands. The feel and notable lack of noise from this method of notification is a huge bonus in this watch design. It won't work very well if your watch is really loose.
Finally, if you use Apple Pay on the watch, if you wear it loose, it will think you've removed it repeatedly throughout the day and force you to enter a PIN. Probably. This is based on what Apple has said about the security mechanisms of Apple Pay on the watch. But, it stands to reason it will detect removal based on losing HR monitoring capabilities.
So if you don't care about that functionality, then, I guess you can wear the watch however you want.