Issue resolved! Unpair. Then: Leave Device Hub open at + → Pair Nearby Device → Apple Watch. On the Watch, open Settings → Privacy & Security → Developer Mode. Look for Pair with [your Mac’s name], possibly under Devices. Select your Mac and initiate pairing. The reported sequence displays a six-digit code on the Mac. Enter that code on the Watch. Keep the Watch unlocked through device preparation.

This is truly ridiculous. For nearly a year, I've been dealing with the same issue: having to restart my Apple Watch every single time I want to deploy a new build, while Device Hub repeatedly reports the watch as unavailable. Restarting the watch allows exactly one deployment before the problem returns. I find this level of unreliability and incompetence from Apple unacceptable, especially in its own development ecosystem. Developers should not have to resort to restarting their devices after every build just to get basic functionality working. xcrun devicectl list devices... ==> for my watch, the state is stuck in connecting Watch7,12