MacRumors flagged the change a few days after watchOS 27 shipped on September 14. Double-clicking the Digital Crown used to jump between the app you were in and the one before it, or between the watch face and your last app. On watchOS 27 it brings up the new dynamic app grid, which is what a single click already does.
Apple freed the gesture up for Live Rewind, an Audio Intelligence feature that gives you a transcript of the last 15 seconds the watch heard. 9to5Mac reported that it reaches Series 12 and Ultra 4 later this year and is bound to that hardware. Everything older takes the loss without the replacement. There's no setting to put the old behavior back on any watch, so a Series 12 owner who would rather not use Live Rewind is stuck with the grid too.