When you enroll iOS device which is linked to an iWatch, be careful with the Passcode policy if you define one.
In fact, before enrolling the device the Passcode option is not graded as in below screenshot :
After enrolling the device to XenMobile environment the Turn Passcode Off graded out and iWatch gives a prompt to configure a new 6-digit Passcode (as per the Passcode Policy configured in XenMobile) on contrary to the 4-digit Passcode already configured on iWatch.
As per the documentation iWatch is not supported with XenMobile but the Passcode Policy which is being deployed to iOS device is also getting impacted to iWatch.
Passcode policy configured for iOS devices :
This is the expected behavior, when you apply a Passcode Policy to the iOS device, this will be reflected to the Apple Watch automatically:
https://support.apple.com/en-us/HT204953
“The restrictions you set also affect an Apple Watch when it’s paired to a managed iPhone.”