Please check if this works. Connect the bluetooth headset and open
Galaxy Wearable app.Under Notifications menu, you will have an option to
mute connected phone. If this option is enabled please disable and check
if its working.
This post on Sammobile will answer your query. "That blinking white
pixel is simply the proximity sensor doing its job, waiting for your
ear/face to come close to the phone so it can turn off the display to
prevent accidental touches."