Android Wear watches will be a little easier to navigate without needing to touch the screen, for example. With the new software, you can flick your wrist to view the next or prior cards in your stream of glanceable notifications. That's helpful because the current Android Wear user interface is based on quite a bit of swiping up and down through lists.
Also assisting with the user interface is a new always-on feature that works for the time or for apps. This likely impacts the battery life of Android Wear, although Google has implemented it in a smart way: The screen is only in full color when using it; after a short time, it "dims" to a more power effiecient view.
Like Apple's smartwatch platform, Google's does have some offline functionality: You could already store and stream music from an Android Wear device, for example. Now you can leave the phone behind and still get notifications thanks to the addition of Wi-Fi support in this update.
Google says that as long as your phone is online -- either via a cellular or Wi-Fi connection -- your watch can get information from it over any available Wi-Fi network with web access. The watch and phone don't have to be on the same network, which is a step beyond what Apple offers.
Note that few Android Wear watches have a Wi-Fi radio. The Sony Smartwatch 3 I bought in December does; that's one of the reasons I purchased it, knowing that it would future-proof the device.
Lastly, this software update makes it a bit easier to reply to messages with an emoji even though there's no keyboard -- thank goodness! -- on the smart watches. You can draw an emoji right on the watch face and Android Wear will match it to the closest emoji it can find, and then send that to your recipient.
The newest Android Wear software will arrive first on the LG Watch Urbane in an over-the-air update and later follow on other devices "soon after" that, says Google.