When you enable two-factor authentication on your Google account, you have three options for logging in with a phone. The first is with a code generated from any 2FA application, such as Google Authenticator or Authy. Secondly, you can have Google send you an SMS message. Lastly, Google can prompt you on your phone to approve a sign-in attempt (as long as your phone has Google Play Services).
For some users, the latter method now works on Android Wear as well.
Google two-factor authentication prompts now work on Android Wear for some users was written by the awesome team at Android Police.