I would hope that security critical parts of the OS that can't be exposed as an API aren't being used to communicate with the apple watch. Why would the apple watch need access to these APIs that can't be publicly exposed? Is there any reason beyond apple wanting to make sure other smartwatches are second class citizens in their ecosystem?

This isn't exposing business logic, this is an operating system vendor deciding what it exposes to vendors. There is clearly an API that the apple watch is using to communicate with the OS, why shouldn't other vendors be allowed to access this?