Finally getting around to posting this, and have included photos incase someone asks "describe looks".
In summary - felt some pain on my wrist and under my watch, figured it was just some random itch or insect bite and ignored it for a a few minutes. Took a look and noticed that there was a perfectly circular burn on my skin.
Watch was intact. No damage or drops. Had noticed over the last week that the battery was discharging very quickly. A few random searches indicated that the watch might need a reset and / or it might be an issue with the bluetooth module. The bluetooth seems to get into an aggressive mode if it cannot find the phone to pair with - not proven, internet speculation.
Contacted Xiaomi and asked them if this was a known issue. A few emails were exchanged and ended up just asking for a replacement while they investigated. Figured if they were really investigating, or interested, it would be better for them to have the device to examine.
I don't expect a response from them, just posting this incase someone else has a similar issue with the watch.
back of the watch