It could, but it wouldn't be as fast as a TouchID or FaceID. The delay is due to the "time of flight" sensing the watch and Mac do to ensure you're actually within close proximity of your Mac. So it would only be useful for people using an iPhone 5 or earlier which aren't even supported by the latest versions of iOS/watchOS.
Very few Macs on the other hand have a fingerprint or face scanner, and so using the watch is almost always faster than typing a password.
Very few Macs on the other hand have a fingerprint or face scanner, and so using the watch is almost always faster than typing a password.