There is no iCloud option in the settings. When I use CloudKit I get
Error synchronizing with cloud for store Error Domain=SyncedDefaults Code=8888 "No account"
Does Apple Watch Simulator support CloudKit?
Same issue. This is frustrating, as I see no official statements from Apple this is not supported. The iPhone and Watch simulators are paired, but no iCloud on Watch. I tried everything, and I guess I have to start using physical devices. Very disappointing.