When you are at home on Wifi, the watch will function fully so long as both it and your iPhone are in range of your wifi.
Ditto for wifi elsewhere, such as a friend's house.
If wifi isn't available then connection between phone and watch is bluetooth and shorter in range. Indoors, it often gets to a neighbouring room, sideways or vertically, but that depends on the house construction.
If you are out and about with your watch and phone it's likely they will always be within bluetooth range of each other.
Of course, if you wish, you could buy an eSIM watch version and pay for an eSIM service and then the watch would be independent of your phone and you could go out without the phone and still have access to phone calls, messages, Siri, browse mail and more.