To credit progress towards your Exercise goal, the Activity app aims to identify activity that equals or exceeds the intensity of a brisk walk. This requirement applies both during general daily wear and when recording workouts via the Workout app.
For a minute of activity to count as exercise your heart rate must got above 120bpm.
Exercise credit is awarded for each minute during which this requirement is met. It is possible that, during your activity, you only met that requirement for part of the overall duration.
120bpm is arbitrary but can be moved depending on your settings.
To check that this is accurate - and to update it over time:
On your iPhone, in the Watch app, go to: My Watch (tab) > Health > Edit - tap and adjust items, then tap on Done.
Apple Watch uses different sensors and data sources to track the results of workouts, depending on the activity type. For example, with Apple Watch (first generation) and Series 1 models, the watch can access GPS data from the paired iPhone if it is taken along during outdoor walking, running and cycling workouts. Series 2 has built-in GPS.
During general daily wear and when using the Workout app to record workouts when GPS data is either not relevant or not available (eg Indoor Walk), the Activity app and Workout app track your arm motion (measured by the accelerometer) when estimating results including pace and progress towards the Exercise goal.
For the best results, allow the arm on which you are wearing your watch to swing naturally as you move around during daily wear and to move as expected during workouts.
Calibrating your watch can improve the accuracy of estimations made by Activity app and Workout app.
Resetting your calibration data will not erase your Activity history.
If you would prefer to receive Exercise credit for the full duration of your workouts, regardless of their estimated intensity levels, track them via the Workout app using "Other" as the activity type.
This will credit one minute of Exercise for each full minute of the workout. Active calories will be estimated at a rate equivalent to a brisk walk or based on data recorded by the heart rate sensor, whichever is higher.