You obviously want the biggest battery you can fit in something, but when you get down to devices that are small enough to require watch batteries real-estate becomes really costly. So many sizes exist so that the device can use the one that’s the perfect size for it without taking up more space than it can afford.
Normal dry cell batteries (AA, AAA, etc.) are usually used in devices where they take up only a fraction of the size of the device itself and therefore there’s more wiggle room.
The size of the battery dictates how much electricity it can make. This is measured in ampere-hours, which is how long the battery can used.
Obviously, you could create a giant button battery that lasts a really long time… But it wouldn’t fit in most watches. So, battery size is a trade off between how long they can be used and how big they make the device that uses them. Because there is a large variety of devices trying to be as small as possible, there are a large number of button and coin batteries.
And random fun fact: the other way to measure batteries is the “force” with which the electrons move, called volts. Most watch batteries are standardized at 1.55v or 3 volts. The voltage is generally dictated by the type of chemical used in the battery (silver oxide or lithium.)
If you line up a series of batteries correctly, their voltages add together. Two 3 volt batteries in series will become a 6 volt battery.
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