There's a whole bunch of stuff, not just on the watch and not just updates, that only happen if there's a wifi connection while your devices are charging.
Only having 5G is barely OK when you're travelling, it's not really OK in everyday life.
If you want to update using cellular only, you need to start the process from your phone. Your watch does not support 400 MB/s transfer rates over cellular. It’s a watch, not an iPhone 15 Pro with hardware ray tracing.
If you want to update the watch OTA, it has to be connected to wifi. Cellular is not fast or reliable enough, ergo why Apple set wifi as the base.