Restoring "Use Apple watch to unlock your Applications and your Mac" now made easy

[Rod]

Today I encountered the old issue with AW not unlocking my Mac. Oh no, not again! I thought but I went through the process as usual.
System Settings > Touch ID & Password > Use Apple watch to unlock your Applications and your Mac with the expected result. "Your Watch must be signed into your Apple ID to use this feature, you can sign in using the AW app on your iPhone"
Now I know this doesnt work but checking my AW app I see my watch is sighed into my Apple ID as usual. No joy there.
So, I did what I usually do (now).
Turned my AW and my iPhone off. I kept the MBP running with the Touch ID & Password window open. In the past I've tried turning off the MBP too to no avail.
Next I turn my iPhone on, when logged in I turn on my AW.
Once running and unlocked my AW displays a new message. Activating Apple ID on this watch will enable Apple Pay, remote unlock for Apps and Mac devices (or words to that effect) and an "Okay" button to press.
I press it and I see the toggle for "Use Apple watch to unlock your..." switch to ON.
Finally, they've fixed it.

So, if this happens to you and you are running the current macOS, iOS and Apple Watch OS simply turn off both your watch and iPhone.
Turn your iPhone back on, wait till you are logged in then, turn your AW back on, key in your PIN (if you have one) and wait for the ID approval message.
Once approved it should all be back and working.

 

[MacInWin]

When my AW stops unlocking my MBP, I just toggle the switch off, the back on, in Settings > Touch ID & Password and it is restored. I've never seen (and am glad to be able to say it) where the AW was somehow logged out of the Apple ID account, except when the AW has had the software updated. THanks for the full set of directions, just in case it does happen.

 

[Rod]

In my case the switch is always already in the off position. Toggling it to on results in the frustrating message about signing into my Apple ID on the watch via the iPhone app. It then returns to the off position. This was always the catch, for me and others as I was already clearly signed in and no option to sign out. Seems Apple has finally recognised there was a sign in issue.

 

[MacInWin]

In my case the switch is always already in the off position. Toggling it to on results in the frustrating message about signing into my Apple ID on the watch via the iPhone app. It then returns to the off position. This was always the catch, for me and others as I was already clearly signed in and no option to sign out. Seems Apple has finally recognised there was a sign in issue.

AH, I have it turned ON all the time, but sometimes it fails with a "you must be logged in" kind of message, in which case it toggle it off, then back on, and the MBP asks for my psssword to re-authorize it. I've not seen an error with Apple ID like you described.