Here are the key improvements in the SE 3 over SE 2:

Always-On Display

SE 3 now supports Always-On display, so the watch face (time, complications) is visible without raising your wrist.

This is a big usability boost if you want to glance at time/information more casually.

Faster Chip (S10)

SE 3 uses the S10 chip.

This means better performance, faster app launches, more efficient processing, and also powers new gestures.
Apple

On-device Siri is improved.
Apple


Gestures (Double Tap & Wrist Flick)

With the S10, SE 3 supports “double tap” (tap index finger + thumb) to do actions like answer calls, open notifications, etc.
Apple


"Wrist flick" lets you dismiss alerts/notifications by flicking your wrist.
Apple

Health / Sleep Features

SE 3 gets new health-related sensors: wrist temperature sensing (useful for cycle tracking / ovulation estimates)
MacRumors


Sleep Score: more detailed sleep tracking and insights.
MacRumors

Sleep apnea detection: the watch can detect signs of breathing disturbances during sleep.
MacRumors

Build / Durability

The front glass is more crack-resistant: SE 3 uses a more robust Ion-X glass.
Apple

Same case sizes (40mm, 44mm) but tougher build.
iPhone in Canada

Charging / Battery

SE 3 supports fast charging: ~15 minutes of charge gives up to 8 hours of use; 45 minutes to ~80% capacity.

Rated battery life is still ~18 hours.


In low-power mode, you might stretch usage more.


Storage

SE 3 has more storage: 64 GB vs SE 2’s 32 GB.
Beebom Gadgets

Connectivity

SE 3 may support more advanced connectivity. (Some sources say better modem efficiency.)

Voice Isolation for calls is better.