With the release of iOS 14.5 and watchOS 7.4, Apple introduced a feature designed to allow people with masks to unlock their iPhones using a paired and authenticated Apple Watch, avoiding the need to continually enter a passcode.
Unlock with Apple Watch feature
Apple has published a support document that describes how it works and the requirements that allow this option to work. Apple says unlocking via Apple Watch doesn't use Face ID.
There is a specific set of requirements that allow the Apple Watch to authenticate your identity to unlock an iPhone. Requires iPhone iOS X or later with iOS 14.5 or later and Apple Watch Series 3 or later with watchOS 7.4 or later, which must be paired.
Both WiFi and Bluetooth must be enabled to allow communication between iPhone and Apple Watch, and the Apple Watch must have a passcode and pulse detection must be enabled. Unlocking with Apple Watch must be explicitly activated for this to work. You can find the feature in Settings> Face ID> Passcode.
In order for the Apple Watch to verify identity, the watch must be on the wrist and unlocked and allows you to wear a mask that covers both your mouth and nose, presumably to instruct the iPhone to use the secondary unlock method instead of the facial identification.
To unlock the iPhone with the Apple Watch, you need to activate the iPhone by lifting it or by touching the screen and then looking at it to unlock it. The iPhone peek requirement is meant to prevent the feature from working when you are not near your iPhone and while Apple does not specify this, it seems sensible to include a proximity requirement, because it will warn you if you are not close enough to the phone. .
It is worth noting that unlocking with Apple Watch only works to unlock the heliPhone. Does not verify identity to use with Apple Pay, does not confirm passwords in Keychain Access or password-protected apps, which will still require Face ID or manual password entry.
While not as secure as Face ID, Unlock with Apple Watch is a convenient option for those who are tired of having to manually enter the passcode on their devices while wearing the mask.
