https://techcrunch.com/2017/09/12/the-cellular-enabled-apple-watch-has-the-sim-built-in/

Apple has hidden an interesting twist inside the new Apple Watch: a built-in SIM card that isn’t a SIM card. It’s an eSIM, or embedded subscriber identity module. They’ve been talked about for years but this is the first use of one in a mass market consumer device.

Essentially the eSIM is a SIM card that is permanently soldered to the device’s board, removing the need for the plastic card that holds the chip, the locking mechanism that keeps it in place, and the little tray that lets you swap it out. The resulting chip can be much smaller and perform the same job of providing the wireless hardware what network you’re on and so on.