https://www.theverge.com/circuitbreaker/2017/10/31/16584086/apple-watch-series-3-edge-strips-issue-repair

Apple has issued an internal memo to Genius Bars and Apple Authorized Service Providers confirming that some Apple Watch Series 3s are experiencing an issue where "edge strips" show up on the display, MacRumors reports. The internal memo instructs repairers to fix the device for free under Apple's standard one-year limited warranty.

MacRumors claims to have viewed the memo, in which Apple says only GPS models are affected, not cellular models. Apparently repairers can verify the issue by having users rub their fingers on the display, so smearing appears. If the edge strips don't show up, Apple's says they should clean the display and then have a user breathe on it to create humidity. The moisture might be what's causing the edge strips, as it collects beneath the display.