This means that these owners will need to do a full restore, which essentially wipes their devices. However, there is some good news on that front because it seems that in the latest iOS 15 and watchOS 8 beta, Apple has made some changes where apparently you can still install system updates even if your device has less than 500MB of storage.
It is unclear what Apple has changed to make this work or how it even works to begin with, because as 9to5Mac points out, some update files do come in rather large sizes. However, assuming that it does what it says it does, then this could be good news for those who have devices that are running low on storage, or like we said, it could be great for Apple Watch Series 3 owners who have been unable to install updates unless they re-pair their devices.
Both iOS 15 and watchOS 8 are expected to launch later this year. Both are currently in beta which you can check out if you want, but it might not be the best idea to use it as a daily driver.