Apple Watch is a fully fledged smartwatch, but back before the launch Apple were considering a full health wearable with dozens of sensors relating to tracking health and maintaining user fitness.
Being able to measure conductivity of the skin, blood oxygen levels and other health issues were all part of Apple's original plan, but it had to be scaled back due to the price of parts.
It got to the point where dozens of sensors were added for the sole purpose of tracking one or two features, and apparently the upper management did not see the point in the inclusion of such sensors.
This does paint a new picture on how the Apple Watch could have been, if Apple decided the extra cost was worth the immense level of depth for health issues.
Apple is not giving up on the goal altogether, in fact most of the sensors are going to be added into the second version of the Apple Watch, if the sales of the first generation are good enough to warrant more investment in health.
Health is definitely an area Apple wants to be involved in, considering the depth of the Health app on iOS 8. The real question is can Apple make its health app improve the life of iPhone or Apple Watch users in a meaningful way?
Potentially, but we doubt the first iteration of the Apple Watch is going to show any real results. Perhaps in a few years Tim Cook will step on stage and claim Apple Watch users have 5 years more life expectancy, due to the smartwatch being able to spot problems instantly.
Having all of these available health sensors does present a good argument for a modular smartwatch, allowing users to buy the health sensors they believe are relevant, and discarding the ones that do not bring any benefit.