At the moment, there are two ways to use Android Wear to control your smartphone camera. The first is Google's own method; the second uses a third-party app for much more control.
Let's look at Google's implementation first. To get started, download the Google Camera app from the Play Store. Launch the app from your phone, then Android Wear will show a card asking if you want to use it to remotely control the app.
Your Android Wear face will change to a blue button. Once pressed, this will remotely trigger the Camera app to take a photo.
Unfortunately, Android Wear doesn't give you any extra control apart from taking a photo using a blue button on the screen. You can, however, adjust features like HDR mode and exposure compensation by selecting these in the Camera app before taking a photo using Android Wear as the button.
Want more than just the basics?
Wear Camera Remote is a free download from the Play Store, adding more functionality than the standard Google Camera implementation.
Once the app has been installed, you can launch it from Wear by speaking the command "OK Google, start camera app". You can also substitute "launch" for "start" and it will understand what you want to do.
Now, you will see a live stream of what the smartphone camera is seeing on your wrist. Swipe across for options to flip to the front or rear camera view; turn the flash on or off; or set a self-timer.
A small preview of the final image will appear on your Wear screen, with the actual image stored on the smartphone. The live stream works as long as you're in Bluetooth range.