Doesn't work for me, unfortunately.
I have upgraded El Capitan straight to Mac OS Sierra b4, watch to Watch OS b4 and iPhone 6s Plus to iOS 10 b4. I've enabled auto-unlock using the instructions in the 10.12 b4 release notes but the watch will not unlock my MBP (13" early 2015 model).
When I wake from sleep or screensaver, I get "Unlocking with Apple Watch" displayed for approximately 2 seconds, along with a spinning icon, followed by the password prompt. Selecting Cancel just repeats the above.
I've rebooted MBP, iPhone and watch a number of times to no avail.
Would be very grateful for any suggestions...
Hmm - just noticed that under Devices (iCloud account settings) it still says "This device cannot be used to receive Apple ID verification codes" for my watch. Perhaps this is relevant?