"The Watch app resides on the user’s Apple Watch and contains only storyboard and resource files; it does not contain any code. The WatchKit extension resides on the user’s iPhone (inside your containing iOS app) and contains the code and resource files for managing your Watch app’s interface."
It looks like there are native Apple apps on the watch: they noted in the intro video that clicking on an image of a map opens up the Apple Watch's "Maps App"
It also has built-in time-display capabilities in the SDK to limit the amount of traffic going between watch and phone (i.e., you don't have to manually update a timer or clock display from your own code, the watch does so locally).
Seems like all of this is meant to reduce processing on the watch side, and also to minimize the amount of data moving between watch and phone.
Edit: better direct link: https://developer.apple.com/library/prerelease/ios/documenta...
"The Watch app resides on the user’s Apple Watch and contains only storyboard and resource files; it does not contain any code. The WatchKit extension resides on the user’s iPhone (inside your containing iOS app) and contains the code and resource files for managing your Watch app’s interface."