Apple Watch Series 3 "Cannot Install Update" due to available storage I'm attempting to update an Apple Watch Series 3 to watchOS 7.4 via Software Update.
When I Download and Install the update, I get the error message:

Cannot Install Update
To install the watchOS update, your Apple Watch needs to have at least 2.5 GB of available storage. You can free up storage by deleting apps using the Apple Watch app on your iPhone.

I had this same issue when attempting to install watchOS 7 last year. I went through the process of deleting apps and data, however I was never able to delete enough to proceed with the software update.
Research indicates that this may be an issue with the Apple Watch Series 3. The watch has 8 GB of available storage, which may not be enough to ever download a new watchOS update.
Can an Apple Watch Series 3 be updated normally by deleting apps and data? Or is there a hard limit with the 8 GB that does not allow this?
How else can I update the Apple Watch Series 3?
The alert on my watch links to this Apple knowledge base article:

If you don’t have enough space to update your Apple Watch
https://support.apple.com/kb/HT211283

At the top, there is a note specifically for the Series 3:

If you have Apple Watch Series 3, skip directly to the steps to unpair and update your Apple Watch.

This indicates that the only way to update the Apple Watch Series 3 is to perform an unpair and update.
Skip directly to that step, and don't bother manually deleting photos, music, or data.
After updating watchOS, you can unpair the watch again and restore from your previous iCloud Backup.