As a few have said the issue is with the Watch not supporting 5Ghz wifi. I switched my phones connection to a 2.4Ghz wireless network, turned the watch off and back on, restarted the pairing process, start the watch update….voilà! It’s updating.
Note that I did take the extra step of putting the phone in airplane mode, while connected to the 2.4ghz band Wi-Finand rebooted the phone too while trying out this process. Worked like a charm.
Good luck to all with this.