The patent seems specifically aimed at solving the problems of competition for control space and display space on such a small device. Google notes that "the available space for a tactile interface may be sized relative to display requirements. Further, the ability to customize a device may be limited to changing display options on a fixed set of hardware associated with the device." In other words, the fixed hardware of a smartwatch, such as screen, body, and strap components may be a limiting factor. Hence Google's imagined a multitouch control surface on the strap on either side of the display--a configuration that seems very similar to the touchpad on the side of a Google Glass headset.
It's a small innovation, sure. But it does indicate that Google is continuing to pursue smartwatch wearable tech. Earlier this year Apple was said to have a 100-strong team working on its own smartwatch technology.