Can someone tell me why they're using a full Android stack for Android Wear?? To me its doing nothing that small (read very power efficient) micro such as an STM32 or an MSP430 could do with much more efficiency.

There is no reason whatsoever to run Linux/Android/Dalvik/etc on a device that just needs to run a Bluetooth stack & LCD. Doing this using an STM32 would give you an order of magnitude (guess) improvement in power efficiency with no difference to the user.