Bazaliy is a security researcher at Lookout and co-founder of the Fried Apple team. During a presentation at DEFCON (you can download the slides from here), he detailed the steps taken to get to a fully jailbroken device.
In order to get SSH working, Bluetooth is used to forward the connection from an iPhone to the watch. Bazaliy says his next steps for the jailbreak are to interpose or trampoline system functions, catch data on sync with an iPhone, create tweaks for a watch and run frida and radare. It's unclear if there are plans to release the jailbreak publicly but we'll let you know if we hear more.