But when you turn airplane mode off on one, will it turn off as well on the other? And if so doesn't that mean that some type of transmission took place and hence makes airplane not safe for actual airplanes?
it doesn't do that. if you switch airplane mode on on either your iPhone or watch, and so switching it on on the other one as well, they lose contact and switching it back on on either one won't do it on the other. this is why I had so disable this option.