Auto Unlock Requirements
After installing the GMs to Sierra and Friends I was eager to try out the Auto Unlock feature with the Watch as passwords generally suck and re-entering them time and again sucks more.
With all my devices on the same Apple ID and updated, I went to the Security prefs on the Mac and lo … no option for it. After reading around I learned all the devices must be marked as Trusted in iCloud, which means you need Two-Factor Authentication (not Two-Step). I set this up and re-added each device to iCloud until they were marked appropriately. Still no option on the Mac.