There is no way Apple could have possibly predicted faceid would fail like this. Under normal circumstances it works really well.

If Face ID doesn't work it does pop up the passcode box. They tweaked it a versions back so it was faster to pop up when "mask detected" (though how well that worked as with any ML-based solution varied from person to person). Additionally the upward "home swipe" and "tap the Face ID indicator" options have both always immediately given the passcode box for me. (My favorite thing that happens sometimes is impatience with Face ID will have me swipe for the passcode box, the box will come up, and I get maybe one or two inputs in before Face ID catches up and finishes the unlock.)

This new Watch feature is great for people like me who are paranoid about punching in my passcode in front of a shop full of cameras and strangers, but it's a nice-to-have feature not a "required" feature as some of the above comments seem to complain it is.