There's also an improved display. Its brightness is rated at 1,000 nits, up from 450 on the original model. That's seriously bright, and in the most intense sunlight in the middle of a 90-degree day in midtown New York it was perfectly readable.
...and that helps improve battery life slightly. Plus, the new Series 2 is actually a tiny bit thicker than the last version. You wouldn't notice it unless you held two watches side by side, and even then you'd need to look twice.
Inside, a larger battery helps manage GPS and fitness functions, but it also helped get a little more life than Apple's conservative 18-hour claim.