...Most large watches have a stepped shape that builds up from the lugs to the crystal...
Indeed. Even already-thin watches use that basic design "trick" to make them look and behave even thinner. And by "behave" I mean not catch on clothing, pockets, seat-belts, furniture, etc.
It seems odd. Apple is a past-master at using bevelled/chamfered edges to make their other products look and behave "thin". Think how the Macbook Air's wedge shape lets it slide effortlessly into a crowded laptop bag. Why not use some of those design skills on the watch?