Wear OS 3 is a smartwatch operating system that was made from combining the basics of Wear OS 2 and Tizen and it will be powering the upcoming Galaxy Watch 4 - amongst others. The vast majority of watches can NOT be updated to Wear OS 3. There are however 4 watches that can be updated to Wear OS 3 and in order to do it you will have to perform a factory reset.
Google claims, in its support article, that the Mobvoi TicWatch Pro GPS, TikWatch Pro 3 Cellular/LTE, TicWatch E3, and Fossil Group's upcoming devices later this year will get Wear OS 3 (minus the Galaxy Watch 4 as it will be released with Wear OS 3). The fact that there are only 4 watches that can be updated from Wear OS 2 to Wear OS 3 is a very specific list, and not many people do know of MobVoi.
Google also published another support article saying that in some limited cases the device will be impacted. Wear OS 3 will be, for now, an opt-in upgrade, and as we said before, will require a factory reset. Google says that the update may release sometime in the second half of 2022. Fossils new upcoming watches are said to still be releasing with Wear OS 2 and not Wear OS 3 like the Galaxy Watch 4.