It could be that it caches a terrain database for local areas, in the same way that WOD caches maps. So if you had ever used the altimeter when the watch did have a data connection then it may have cached the terrain data for the surrounding area.Yes thank you.
You described in detail what I mentioned earlier, that is how the baro system works initially supported by GPS (as a relative change in altitude from the base value given by GPS, based on the change in atmospheric pressure).
Surprisingly, it turns out that Apple has some mysterious "always-on altimeter"... I wonder what it is based on. This winter I was trekking trails where I didn't meet literally anyone all day long, not to mention any buildings. There was also no cellular coverage, so no WIFI, and yet the readings were, as I mentioned earlier, absurdly accurate.
The issue of recording altitude changes in activity tracking has interested me for years, so I must admit that I am very intrigued by how this mysterious Apple altimeter works.
Again this is a complete guess, but it would be one way to achieve what you saw.
It may not need to store a complete grid with altitudes for every point, but may just store ones on known trails and/or at known peak heights. So it could recalibrate the barometer at known positions and only use it if you moved from those positions. If you never left the trail then it would be extremely accurate without requiring a lot of data to be stored. Again this is just speculation as there are many ways to achieve this.