The Wi-Fi is only used to sync your watch to your phone when there is a disconnect or interference between Bluetooth on your phone and Bluetooth on your watch. When the Bluetooth connection fails the watch and phone switch to communicating over Wi-Fi. Apparently you can leave your phone at home, go somewhere you have wi-fi access (not a place where you have to logon to a page, and confirm that you agree to their terms every time. In other words things like Starbucks, McDonald's, large retail stores, etc will not work. Some place you've entered a password, and your phone automatically logs into would work). Wi-Fi on the watches will fail if your phone is turned off. If you're phone and watch are kept it close proximity to one another, and your phone has a decent Bluetooth chip/card then you shouldn't have a need for the wi-fi feature (and turning it off will save you battery).
For people reporting disconnects, I've read that some people reported if you have the Lost Phone feature enabled (where it buzzes your watch when you are out of range / forgetting your phone) in ZenWatch Manager can apparently lead to more frequent disconnects. Don't know if its true, but if you have the feature enabled you can try disabling it and see if that works any better for you.