Finally! I have an update for everyone fighting this Watch Series 10 low volume+distortion issue. You are not alone and an escalation fix request is underway - via a firmware update! (per Apple Store)
Unfortunately, no timeline for the fix was available.
First, note that this is NOT a cleaning issue at least for my Series 10 watches (on #2 now) - my watch is always CLEAN with NO lotion or other gunk. Also do NOT get it wet, admittedly for mostly gray-hair paranoia reasons. Neither force-restart nor re-pairing the watch helped.
After a warranty replacement for my Series 10 and another repair disposition of "unable to reproduce" (but yet volume came back Ok again for a couple of weeks), this is starting to make sense. On the last "non-repair", I'm told the techs have a way to reload the firmware that fixes the volume... for the usual 2-4 weeks, before it backslides to useless. Now it's sounding like a firmware bug vs design problem.
Let's hope Apple prioritizes this firmware fix. In the meantime, sent my watch in for yet another replacement or firmware reload.
Taking calls is THE key feature for me, so this is a massive problem. Besides, running for my phone is sooooo 1997 ;)
Hope this helps folks suffering through the same pain. Hang in there!