When you strap your Apple Watch on your wrist you will be prompted to enter the device passcode. This will enable Apple Pay. If the Apple Watch is removed from your wrist, so skin contact is lost, Apple Pay and the NFC feature are deactivated.
To make a payment using Apple Pay on your watch using your default card, you simple need to double-click the side button and hold the display of your Apple Watch within a few centimetres of the contactless reader until you feel a gentle tap.