I tried to debug my WatchKit app on a real Apple Watch today. After hitting the Debug button in Xcode, the main iPhone app was installed properly, but the Apple Watch only displayed the message Failed to install xxx, error: Application Verification Failed. The WatchKit app doesn't install.
I was aware of this: WatchKit App Rejected for "Failing to Install" , but it didn't help because my Xcode project file is alright.
How to make debug work on a real Apple Watch?
It turns out you also have to add the UDID of the Apple Watch to the Apple Developer Portal, and update your Development provisioning profile to include this UDID.
The UDID can be obtained in Devices window of Xcode. After pairing, the info of the Apple Watch will automatically display below the info of your iPhone.
At the time of writing, this seems to be documented nowhere, and the error message on the Apple Watch wasn't particularly helpful. So I wish this try-and-error lesson would save you some hassle.