Having a compass and a barometer could be a "happy accident" of already having an all in one sensor that does all that things.

The compass could be easily related to an accelerometer used for detecting watch position (a function commonly used in smartwatches to power on the screen on certain positions that suggest you're looking at it) or detecting "steps".

Not so sure about where could you also get the barometric pressure sensor...

The barometer is "nice to have". The compass is non-negotiable. It is extremely useful once you get used to remembering that you have one. Example: you have arrived at a train station in a new city. You have planned your route - you need to catch a bus from a stop on the west side of the station. You alight on the platform and there are multiple exits - you are completely disoriented. Turn left or right?

You can track elevation with barometer which is nice for casual hiking in the mountains

It would be nice to track elevation change/stairs climbed during hiking, even if you don't care about GPS. I'll probably hang onto my old Garmin for exercise though, so this is sorta moot for me. Mostly it was just surprising to see that the pricier one was not a superset of the cheaper one.

In theory, you could pull GPS data from a connected smartphone, right?

Most smartphones don't come with a barometer, and the compass actually needs to be fixed to the display to make sense.

Barometers can help predict incoming weather fronts - something I use on my phone while backpacking.