I've been struggling with my Apple Watch 3 for a while now. Here are the steps I did to resolve the problem:
Hard reset apple watch > when the apple logo shows hold down the button next to the crown and hold for 30 seconds > select erase all settings and content.
Delete all backups from Apple Watch App > General > Storage > Watch > Delete All Backups
Force your phone to use a WiFi 2.4 GHz channel! This is what finally fixed my watch. I have a mesh network so I had to go into the router settings and force 5.0 GHz channel off, you may have a separate 2.4 GHz channel you can join.
Start the pairing process, it should work.
If I were to do this again, my first step would be using a 2.4 GHz network and trying the update before factory resetting the watch and deleting backups from my phone.
Good Luck!