I've always used the watch version of GBoard on my previous watches (Watch 2 and 4). Now I have the Watch 7 and downloaded GBoard and it is installed, but the watch will not let me choose it as the default. I am happy they improved the Samsung keyboard for the watch, but I still don't like it and don't want to use it. I do not know whether this is a Google problem or a watch problem, so I put in an error report with Samsung, and now I'm off to report to Google.
This may have worked for you, but it may also have been coincidental. They had an update that fixed the issue-not sure if it was Samsung or Google. After your comment, I checked my sleeping apps on the watch and G-Board is still listed as sleeping (read won't run in the background, not that it's unusable) and G-Board works just fine for me now on the watch. For the record the sleep status has nothing to do with any app's functionality. It just stops running in the background when it is not necessary to do so, but will work when activated.
