I came here looking for an answer to the same problem. AOD didn't work. Lifing my arm would not bring up the display. Only rotating the bezel seemed to work. I didn't see a solution here so I got to digging into the settings and somehow I had turned on "Theater mode". Turned that off and all is now normal. Hope this may help some out there.
One of the first things I checked was all the settings, I even went into my local EE shop and got the guy in there to check.
Quick update though, my watch can go for days behaving itself and then I get problems.
I have found that if the AOD is working and then I move the watch from my arm slightly, the AOD turns off.
I then have to keep adjusting how it sits on my arm before it’ll work again.
I am convinced it has something to do with the sensors and how they sit on your arm.