Well for grins I went to the Apple Store (it's only 10 mins away) to see what they would say. I showed the Apple rep the damage and asked what I could do about it. Was completely up front about it, showed him the nick and said I didn't know how it happened, that it was odd it was right to the metal (through the DLC coating), and that I didn't recall doing anything to cause such damage. Told him I bought the watch last Sunday. He had to ask another Apple rep who then looked at it for about 10 sec - ran his nail over it - and said: "Get him a new one". I didn't argue obviously.
I was fully expecting to be told it wasn't covered or something to that effect. Not taking for granted how they resolved this. My lucky day I guess (although not so lucky that it happened in the first place). I consider this a freebie. I'll be getting Apple Care + before the 60 day window that's for sure, for any serious damages.