Ironically, I find their older models with optical receivers a lot more high-tech than the later USB models.

I guess it's one way? But yes, very cool. I can imagine using it with my phone to sync useful stuff directly from my phone to the watch without a cable.

Why was could it only encore with a CRT and not an LCD? Could this be replicated with modern IPS LCDs?

It’s the scanning beam, that LCDs simply don’t have. But fear not, a single LED will also work and was recently reverse engineered: https://lemmy.sdf.org/post/691827

Also CRT monitors were ubiquitous. consumer LCD monitors didn't start appearing until the late 1990s.

It was magical watching a Timex DataLink watch receive data (at a really slow data rate though) - short moment in time before USB and WiFi appeared.