As of this writing the Apple Watch is not available. Apple did give us a day to test it and it works great with #Notes.
The Watch app starts in dictation mode. You will be able to see what you are dictating. Tap Done or Cancel when you are finished. If you tapped Done the text will be add into #Notes.
The results of your dictation will be shown on the watch along with a button to start another note.
Here is the demo: