The voice all comes out of the watch and nothing from the iphone when you answer the call from the watch.
I naturally just have my arm bent at 90deg out in front or across the body and it works well enough. I do lift my hand up to chest height if there is a hearing problem.
The sound quality from the watch is good but obviously from a very small speaker so lakes depth of sound.
No complaints from the person on the other end of the call.
I have just tried setting the audio routing to allways to hearing devices instead of automatic but it makes no difference at all. Fail.