It works, but it runs slower than molasses; it takes about an hour just to boot up.
“On paper, its processor alone is about twenty-five times faster than the average 386, and 512 MB was the size of a hard drive in the mid-nineties, not memory.” - says Lee
With a 520 MHz processor, 512 MB of RAM, and 8GB of internal storage, the Apple Watch packs a lot of computing horsepower into a tiny package.
To get Windows 95 running on the Apple Watch, Lee had to modify Apple's development software, which allowed him to turn the OS into a Watch app, emulating an environment for the OS to run on.
To deal with the fact that Apple Watch's screen is always turning itself off when not in use, he set up a motorized tube that regularly turns the Watch's crown, preventing it from falling asleep. Also, Lee altered the Watch's software to let Windows 95 track a single fingertip, hence the constant swiping in his video.
Read more about how Lee managed to do this on his blog.