I've had this issue with my previous watch and new one. After using the watch a lot for activities, music, etc. The AOD stops and just works with wrist. After I reboot the watch it is fine. This is kind of annoying.
I'm finding I have to reboot the watch quite often to keep things working smooth. It's not a defective watch, it's the software.
Absolutely NO apps/watch faces installed but stock, and I reset the watch after each update and reconfigure.