Aside from the larger display/and other variations, the most understated difference with the Series 4 is 64 Bit dual core processor, where as the Series 3 does _not_ have 64 bit architecture. So, what does that translate to? It means the Series 4 will have more longevity through support through apps and OS updates over the Series 3. In the grand scheme of things, that’s major.
Agreed it is huge, but I don't think Apple will pull the plug on 32-bit watches anytime soon.
The S3 is still available new, and with its lowest-ever price point this holiday season, they have to be selling like hotcakes. The S3 isn't just an old model that is filtering out as people upgrade, it's a current product that is continuing to bring the Apple Watch to new customers who have never owned an Apple smartwatch before.
As Apple has transitioned into a services company, we have seen the product lifecycles extended. For strategic reasons, Apple also needs to retain a strong value watch in the product line to keep any upcoming low-cost competition from the new Google-owned Fitbit at bay. Take a step back, and I think the S3 still has quite a bit of life left in it. ?