Apple's Watch is designed to be both fashionable and functional.
Apple Virtual Input Device on Touch Screen
The display includes an application display, associated with an application executing on the computer, and a virtual input device display for a user to provide input to the application executing on the computer via the touch screen.
What is shown in the application are images of Mac OS X with a pop-up virtual keyboard interface. Apple appears to be experimenting with multiple methods of displaying a virtual keyboard on top of an existing Mac OS X screen. Options include a simple overlay, compressing the Mac screen evenly or compressing the edges more than the center/area of interest or simply a movable pop-up window.
A flurry of Apple Tablet related patent applications have appeared in the US Patent and Trademark office, indicating that Apple is pursing active research into the topic. This most recent application was submitted relatively recently on September 16, 2005.