Apple took a clever approach to handling the extremely constrained power environment of the Watch (at least initially). To start with 3rd Party apps will run in a split mode. The Watch itself handling the UI parts of the app with an iPhone based app extension doing all the heavy lifting and computation. This is architected in such a way as to enhance interactivity (it isn’t just a streamed movie) while still keeping the Watch components very lightweight.
As he notes, Apple enabled more than he was expecting for this first release.
What's impressive after reading some documentation and thoughts from developers today is the technology that's powering WatchKit remote apps – Extensions. Initially, many of us assumed that extensibility in iOS 8 would just be about sharing files between apps, but it's turning out to much more.