Halfway wrong (or "halfway right"?)...I could be wrong but I thought the mirror feature allows you to pick the watch features you want to activate.
For example when your watch mirrors your iPhone, when you put your phone in airplane mode your watch goes into airplane mode. If you turn on wifi on your phone on the plane the wifi mode will go on your watch also all other feature will remain off.
I thought that's why it was important to make sure you set your mirror settings. The phone can talk to the watch even if the watch is in airplane mode if the mirror setting are on.
Do I have it wrong?
If you set the mirror setting for Airplane Mode, then when you enable Airplane Mode on the watch, it will also tell the phone to switch to Airplane Mode. This is useful when, say, you board an airplane and decided to keep the phone in a purse or carryon bag -- you won't need to dig out the phone to switch it to Airplane Mode.
When a device is in Airplane Mode, though, its radios are turned off, and it won't communicate with anything else. Say that the watch is still in Airplane Mode -- even if you switch the phone's wifi and bluetooth on and you try to do a "find my watch", the watch will not respond.