Earlier quoted context omitted.
Their new weather forecasting service is also intriguing. They will soon have millions of thermometer-equipped Apple Watches in the world (IIRC the Series 8 and AWU will have these), allowing them to create an incredibly detailed mapping of temperatures around the world (or at least places where people can afford expensive watches...).
Those watches measure the temperature at the underside of the device, i.e. the temperature of the wearer not the air . And that data they claim stays on your phone, not in their cloud.
Agreed on the local-storage-for-health-data bit, but I'm sure they could argue that the ambient sensor isn't privacy-relevant.