There’s a fix for it where you remove all the unlock entries in Keychain, and then re-enable it. Only thing that worked for me long term (but it did fix it 100%)
I tried this yesterday. It... helped. But what I've now found is that if I escape out of the password prompt (which will turn the screen off again) and then try to unlock it a second time, the watch unlock will be triggered. I wonder if it's something about waking from sleep. (I also wonder if it would have worked before to do the same thing, but it never occurred to me to try.)
https://georgegarside.com/blog/macos/fix-apple-watch-auto-un...