The watch has 3 connection modes: bluetooth, standalone and remote connect. BT obviously offers the most functionality, but the watch can handle phone calls, texts, and run many apps in standalone mode, no connection to the phone. In standalone mode, no notifications from the phone are passed through. With remote connect, the watch is connected to the phone via cellular or wifi. While functionality is more limited than BT, it does allow notifications to be passed through.
I no longer carry around a smartphone. I leave it at home on wifi, so that it's remotely connected to my watch. It use it for calls, texts, calendar, to do lists, and other tasks that don't require a large screen. I usually have a tablet close by for computing, media consumption, or content creation.