https://wccftech.com/ios-14-7-1-and-ipados-14-7-1-for-iphone-and-ipad-now-available/

A minor update for iPhone and iPad users is now available in the form of iOS 14.7.1 and iPadOS 14.7.1. Download it right now.

Given how quickly this update has been released after iOS 14.7 and iPadOS 14.7, therefore it is safe to say that Apple has quickly patched a few bugs that were left behind. And as you would expect, it fixes the issue where a Touch ID iPhone would fail to unlock a connected Apple Watch without entering the passcode.