I suddenly found myself dealing with a frustrating problem this week. I suspect some troubleshooting steps to get my Magic Mouse 2 working again caused the issue. Specifically, I reset the Bluetooth config and then reset the SMC. I’m not positive this is what caused it but the timing seems to be more than just coincidental.
I was unable to unlock my MacBook Pro using my Apple Watch. It had worked flawlessly for some time. Toggling the Handoff settings on the phone and the watch, toggling the “Allow your Apple Watch to unlock your Mac”, and any other settings I could find that were even remotely related, including the Wrist Detection, did nothing to solve the problem.
I finally found the solution in a suggestion from someone on Mac Rumors to sign out of iCloud via System Preferences in macOS and then sign back in. Sure enough, that immediately solved my problem and now I’m back to unlocking my system using my Apple Watch.
Updated 06/13/2018: I suspect there’s a bug related to using Boot Camp that requires resetting the SMC to get Bluetooth devices working again.