Step tracking is accurate, distance isn't

Did you calibrate your personal step length in your profile?

No. I don't know what my average step length is- the other devices in question are accurate without any calibration, however.

For me it seems mostly ok. I just checked the route as much as possible with google maps. Might be off by 500m over 17km, but that's difficult to say because I was geocaching and often walked in circles at the same spot. The track itself also looks very neat. There's just one spot where I place serious questionmarks at, where the track suddenly crossed over a big road and then back to the side I was walking on. My old Fenix 6s would have done that all the time.

I am referring to tracking steps+distance outside of an activity, not during an activity. 

then as GPS is off the watch has no idea how long each step is so cannot give you an accurate distance.

Find a running track or measure out a couple of hundred meters and just walk casually and count your steps, divide the count into the distance and you get an average length of a step. This is a standard technique when learning to use a map and compass and distance estimating, there are even formulas for walking up and down hills of varying gradient. Also walking around the house counts steps but those step will be shorter then when you are outside actually walking somewhere.

TBH worrying about distance covered over a whole day by counting steps with the GPS is just pointless unless you really need something to worry about.

Thanks for the above guidance. I primarily use the watch for tracking various sports but I don't quite understand how there can be such a discrepancy.

I have had 5+ Garmin devices and this is the first to have such a problem. Now, whether "worrying" about this is pointless or not is entirely user dependent.

You just can't have a $1000 watch be less accurate than one costings a fifth of that. 

well maybe the other watches had GPS running and you didnt know. ?. Phones also use GPS and triangulate on the phone towers to determinate where they are.
The fact is without a reference, the watch without GPS running only has your step count to work out the distance, and if you dont tell it your average step length it will by a guess.

I have the same issue. My Fenix 6 would record a much shorter step distance vs the 2.8 foot distance the Fenix 7 uses for each step.  So I end up walking much father with the Fenix 7 vs the 6 with the exact same number of steps. I believe my actual step length is about 2.5 feet and my Fenix 6 was recording it at about 2.3 feet.  So the jump from 2.3 to 2.8 feet reflect the much greater distance being recorded.