I've had it work two ways. I. Straight from the watch: first run the Here app on the watch, and after a pause on a "finding location" screen, it comes up with your location (a street address). Pressing the arrow/nav symbol at the bottom of the screen brings up a list of recent destinations, which you can scroll through and select, which brings up a "getting routes" screen and then a choice of auto or walking routes. Select one, and then the Here app is launched on the phone and directions appear on the watch.
Method II: Run the Here app on the phone, select a route and start guidance, and then (with luck) the directions appear on your watch.
Both of these have not been anywhere near 100% reliable for me. I think location services are still one of those things that are a bit unstable on this ecosystem.