All else being equal, it drops consumption. But generally when you go down in process, you increase what you pack on the die, bringing the power back up.
The A7 doesn't really do that though, it was created in no small part to provide the same power as the A8 with much better efficiency, and to be paired with an A15 in big.LITTLE for transient high load (which isn't necessary in a smartwatch)
Phone-oriented SoCs have aggressive frequency scaling and power gating, such that the newer chipsets have lower power consumption in ordinary usage and only scale up to similar power usage in high-utilization applications.
