I have a 17 Pro Max and a paired Watch Ultra 3. I'm having weird issues with the AOD as well. My phone is never in Low Power Mode, Charge Limit is set to 80%, Battery Health is Normal, and finally, Adaptive Power Mode is also off.
I do have one Focus setup, however, that only enables between 22:00 to 07:00 ET.
The issue I have is when I'm near my phone, the AOD works perfectly fine, but when I walk away from my phone, most likely out of range, the AOD turns off. Now, the AOD turning off was also a thing on iOS 18, so I don't mind it at all. My issue is that now under iOS 26.0.1, the AOD will turn off and won't turn back on again, even after I have come back to my phone. Under iOS 18, when I returned to my device, even if I wasn't using it, the AOD would turn back on by itself. The only way to get the AOD to switch back on again under iOS 26.0.1 is to use my phone for a good 5 minutes (with the screen on), or restart my phone. I hate having to do either, because I shouldn't have to.
I have tried the following to try to fix this issue:
-Restarted my phone (which temporarily fixes the issue)
-Unpaired and re-paired my Watch Ultra 3
-Fully erased and restored phone from iCloud back-up
-Did a hard-restart as per the instructions provided by one person in this thread
Nothing seems to be helping.
I genuinely believe that this is a bug in iOS 26.0.1 and needs to be addressed.