Did you install iOS 14.7 yesterday and your Apple Watch no longer unlocks at the same time as your iPhone? That may be correct: Apple has indicated that there is a bug. This occurs with iPhones with Touch ID.
iOS 14.7 bug: Apple Watch
If you have activated the ‘Unlock with iPhone’ function on your Apple Watch, you will never have to enter the code on your watch again. Because if you use your iPhone, your Apple Watch is automatically unlocked. But since yesterday’s update, that’s no longer the case.
The Apple Watch now asks for an access code. You only have to enter it once a day and it remains valid as long as you continue to wear your watch. Apple also mentions this as a solution to the problem on a special Support page: just enter that code once.
It becomes more difficult if you have forgotten the access code for your Apple Watch. There is then nothing to do but reset and configure your Apple Watch. Is your Apple Watch linked to a business iPhone with Mobile Device Management (MDM)? Then you can’t even enter a code on your Watch and you have to enlist the help of the system administrator at work.
An update is coming
The problem only occurs on iPhones with a Home button and Touch ID, such as the iPhone 8 or iPhone SE. Apple has already indicated that an update will also be released that fixes the problem. We expect iOS 14.7.1 to come out one of these days.