Whether you're sending the device off to someone else or you simply just want a fresh start, users now have an easy way to perform a factory data reset on any of their Android devices, and that includes both Android Wear smartwatches. I have reset my own Samsung Gear Live once just after I set it up initially just get a wrap on it, and truthfully the process is pretty straightforward and really very easy. It's of course a little bit different than how you might perform a factory reset with your Android smartphone or tablet, but in the end the basics are all the same. For the most part it just comes down to a couple of different steps due to the different software and interface.
To begin, all you have to do is first wake up the screen, then either hold down the power button until you get your Android Wear's device options like power on/off, airplane mode etc., or you can wake the screen, double tap the display, and scroll to the settings menu option. Once you're inside settings regardless of the method you used to get there, just scroll to find the "reset device" option as displayed in the image above and tap on it. After you tap that option you will be greeted with a screen that asks you to confirm the reset device option. This is the point of no return so be absolutely sure that you want to reset your Android Wear. Once you confirm that you want to move forward, the reset will begin and then power cycle. Once it's back up you're all finished and you'll be able to proceed with a fresh setup process.
The reset is also mostly capable via the voice options, plus a couple of screen taps. Begin by saying the "OK Google" command, and once Google asks you what you want to do all you have to say is "settings", then scroll and navigate to the same menu option for resetting the device, then confirm. The process as you can see isn't overly difficult by any means and should yo ever need to get this done you now know how.