Why does the Watch app on my iPhone state that my apps will need to be updated during setup when I already have the latest versions installed?

Solution 1:

WatchOS apps are a complex hybrid since they started as all being dependent upon iOS and now they can be independent or dependent. You need to get both sides synced in some cases, hence the message to update iOS when watchOS is in play with one or more paired watches.

• https://developer.apple.com/documentation/watchkit/creating_independent_watchos_apps/

To be clear - some updates only apply if the watch component is required to be active or the developer ties them together when submitting their builds to Apple. This is all standard and you might even learn that some apps get different builds based on different hardware - not all apps are monolithic based on hardware versioning and software versioning. (Like an older watch that’s still supported but not the latest watchOS might get a different app than the latest watchOS gets).