Pace and distance will always come from Stryd when using the Apple Watch. You do not need to set this up like other Garmin watches.
An additional clarification:
The GPS/Stryd toggle in the iOS app only affects the speed source (pace/distance) for running with an iPhone. It has no effect on running with the Apple Watch. Additionally, it will not affect the GPS map of the iPhone (nor AW) run.
*IMPORTANT: When running with your iPhone and Apple Watch, disable Bluetooth on your iPhone to ensure Stryd stays connected to your Apple Watch.