A smart watch should be a compact portable sensor package with a minimal display. Think a fitbit but MUCH more capable. Data logging versions of accelerometer, thermometer, barometer, chronometer, lightmeter, altimeter, hygrometer, GPS, voice logging, etc. Basically anything that ends in the word *meter. Should be able to interact with a smartphone or PC but not be dependent on it. Should have an API to allow applications and other devices to do interesting and custom things with it. Should be waterproof and have a waterproof data cabling (or wireless) system to allow other devices to interact with it. Battery life needs to be substantial. >72 hours at absolute minimum but really more like a week. Some storage and the ability to play music similar to an ipod. Any display should be minimal and energy efficient but more user friendly than your typical wristwatch. Think something like an ipod nano most likely.
Use cases? Anywhere you would want to record such data but don't need/want the bulk and energy drain of a smartphone screen. Exercise, hiking, research, boating, diving, etc. I don't wear a watch but I could see tons of uses for a compact wearable sensor package. Such a device could both be worn and mounted to various objects to useful purposes.