This changed in watchOS 8.1 (
link). Prior to 8.1, you could have dictation as the default input method if that's what you used last. Now, it'll only remember either the keyboard or scribble as your last used input method.
The best you can do now is to change to the scribble input method (swipe up on the keyboard). You'll still have to tap the microphone button to dictate, but at least the keyboard won't show up the next time you need to type/dictate text.