Mr. Underscore:

Apple took a clever approach to handling the extremely constrained power environment of the Watch (at least initially). To start with 3rd Party apps will run in a split mode. The Watch itself handling the UI parts of the app with an iPhone based app extension doing all the heavy lifting and computation. This is architected in such a way as to enhance interactivity (it isn’t just a streamed movie) while still keeping the Watch components very lightweight.

Good news for battery life, yes. And also, this may answer the question about how often Apple expects you to upgrade your watch. If the heavy lifting and computation of Watch apps is all done by our iPhones, it means the Watch itself serves more or less as a (very smart) second screen — a wirelessly-connected external monitor, so to speak. And so, perhaps the reasonably-useful shelf life of an Apple Watch could be several years.

David Smith’s Initial Impressions for WatchKit