Of course when Apple seems to be on a 18-month refresh cycle, your own personal upgrade cycle doesn't necessarily have to align with Apple's. This depends more on the device's useful life and how much Apple wants to continue to provide support such as WatchOS upgrades and compatibility with future iPhone models. In the end, if you still want to keep using it even after it's no longer supported, it could just be reduced to a time piece and limited fitness tracking device, given the battery condition is still healthy enough to last throughout the day (or you have the means to recharge it mid-day).
I'd say given Apple's past track record of keeping legacy devices usable, we could expect a good 4 year use out of the current series, 5-6 years if really pushing it.
I think when you consider Apples hardware, it usually last longer than most other competitors. And there is the likeliness that when the Apple Watch isn't supported for certain generations, you are correct, you could technically to use as a timepiece until it's no longer useful or the battery fails, etc. which, the way the current resale value is, I would rather keep my Apple Watch versus sell them, being they're not really worth much anyways. They quickly the devalue.