Here are the requirements from Apple:
If you have a Mac (mid-2013 or later) with macOS Sierra or later, your Apple Watch can instantly unlock your Mac when it wakes from sleep. You need to be signed in to iCloud using the same Apple ID on both your Mac and Apple Watch.
Tip: To find out how old your Mac is, click the Apple menu in the top-left corner of your computer screen, then click About This Mac. The year your Mac was made is listed next to the model—for example, “MacBook Pro (Retina, 13-inch, Mid 2014).”
Turn on Auto Unlock. On your Mac, choose Apple menu > System Preferences, click Security & Privacy, then click General. Select the “Allow your Apple Watch to unlock your Mac” checkbox. If you don’t have two-factor authentication turned on for your Apple ID, follow the onscreen instructions, then try selecting the checkbox again.
For more information about two-factor authentication, see the Apple Support article
Two-factor authentication for Apple ID.
Your Mac must also have Wi-Fi and Bluetooth turned on.
Unlock your Mac. While wearing your watch, just wake up your Mac—no need to type in your password.
Tip: Make sure your Apple Watch is on your wrist and unlocked.
Dave