I do not recommend unpairing the Watch from Xcode - I did that, and now I cannot pair it again. Edit: I had success following this post: https://developer.apple.com/forums/thread/734694?answerId=786153022#786153022

Also filed FB13158101 Thank-you, everyone, for this really useful thread!

sudo xcodebuild -runFirstLaunch will install additional components from the command-line.