If you have a series 1 Apple Watch, it uses the Phone’s GPS at all times.
If you have a series 2+ Apple Watch, the app uses the iPhone’s GPS when available (via Bluetooth). When the iPhone is not in range, the watch will use it’s own internal GPS. Ideally, the app would default to using the watch GPS, however this is currently a technical limitation imposed by Apple, presumably to preserve battery life.
This means that for best performance a golfer should keep their phone in their pocket. We hope to fix this as soon as Apple has a more convenient solution.