Unfortunately, IPA size still matters for the AppleWatch, since it throws a validation error if the size is beyond a measly 50 MB limit (with all the bloat included).
Fortunately, setting "Embedded content contains Swift" on the Apple Watch application target to NO reduced the Apple Watch size by 16.5 MB, and thus passing validation.
NOTE: My whole app is written in Swift, with embedded Swift-based framworks. But the code is in the WatchKit extension, not the application!
I already asked on the forums if this solution is appropriate or not, no responses yet .. Also, I already submitted this build to itunes connect, and it has been processing for 30 mins now (sigh). Will post back here, or remove the answer if I faced issues with this approach.
You can see in the screenshot below how the WatchKit app is missing the Frameworks folder in the newer archive, removing 16.5 MB
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