It's a rain coat that works well in cold weather. The outer shell is stiff material which is also present in the cuffs. The inner shell is a gortex type material. I would have thought the same as you, but I find that it rubs quite a bit which causes the watch to react as if it had been touched or an extended touch. I quite often have my music interrupted for an "OK Google" moment, or I'm staring at the watch face selection screen. Frustrating.
BTW, turning on airplane mode sort of defeats the purpose of the watch. When it's not rubbing against my coat, it is ever so convenient to be able to pause the music from wrist instead of digging the phone out of my pocket...