mavericks and later Yosemite and iOS 8 requires the iPhone to be on the same wifi network and powered on to place and receive calls and to send and receive regular text messages.
with yosemite and iOS 8 and watch os 1.01 , you could only answer a call on your watch if you were in range in bluetooth range of the paired phone.
t-mobile (and soon sprint), El Capitan and IOS 9 no longer requires the phone to on the same wifi network. it does not even require the phone to be on. and it does not even need the iPhone to be within range of any of your devices.
with yosemite, iOS 9, and watch os 2, your apple watch no longer needs to be in bluetooth range of your paired iPhone, it does not need your iPhone to be powered on. you are free to use it to make and receive calls. and you can receive and send texts, however, dictation does not work. this is what t-mobile offers that AT&T does not
hopefully , continuity including "calls on other devices" over cellular will come to AT&T as well