iphone 7 - what is the flashing red or green lights coming from the battery?

That happens sometimes,people put their watches on the table and the watch starts measuring a non existing heart rate,It happened to me and I realised that as I was putting the watch on the table I unknowingly brushed the watch face right where I have the heart monitor watch complication and it tried to take a non existent measurement.

By the way it's nothing to worry about,to turn off the sensor just restart the watch.

If you mean the lights on the underside of the watch then these are the sensors for ECG,heart monitor blood oxygen and wrist detection.