Why are there less physical buttons for use by the App on Wear OS?

You probably have a Wear OS watch with Wear OS 3.0 or higher installed on it. This version of Wear OS reduced the number of physical buttons that can be made available for Apps. Wear OS 3.0 reserves a minimum of 2 physical buttons for the OS itself, if the watch has more physical buttons these can be used by the App. Therefore this can vary per make and model.