If you go to
https://overcast.fm/ there is an Uploads tab which lets you upload files and then they show up in Overcast in the Uploads item in the list of podcasts. I am not surprised you didn't know about it though. Overcast has no documentation or even FAQs. The only reason I found out about this was that Marco Arment mentioned it on ATP. That's the trouble with 1-man shops like his.
yes. 1 GB is enough for most books but I have a few that are bigger and I had to split them because while Overcast gives you 10GB there is 1GB limit on individual files.
I can't comment on Apple Watch as I don't have one so this is not a consideration for me.