To upgrade to the latest software, the Apple Watch must have at least 50% battery life, be charged, and be within range of the iPhone.
Along with iOS 14.5, watchOS 7.4 adds a new “Unlock with Apple Watch” feature that allows an iPhone with Face ID to use an activated and authenticated Apple Watch as a secondary security measure while wearing a mask, removing the need to enter a passcode.
Face ID won’t work if you’re wearing a mask, but this new Apple Watch feature allows you to unlock your iPhone without a passcode. It works similarly to how the Apple Watch unlocks on the Mac and can be turned on in the Settings app under Face ID & Passcode. When wearing a mask, an encrypted Apple Watch combined with Face ID will open the iPhone, but only for mask use. The Apple Watch can’t be used to verify Apple Pay or App Store transactions, and it can’t be used to open applications that use Face ID. In all cases, either the mask must be replaced or a passcode/password must be used instead.
The beta version of watchOS 7.4 will be available for several weeks, with Apple preparing to release the update in early spring.