This question maybe a little dumb for everyone, but after reading some of what I found in internet, I'm still confused about the difference of the two specially when it comes to development.
The first confusing part is, Which one should I get for development.
I wanted to create an application that gets the current gps location and send it into the Server(Android Phone) via Socket, but I'm stock on getting a physical device to test my application, I don't know which one should I buy.
The second confusing part is, when creating a new project in Android Studio for Android Wear, you'll have to choose which minimum api you gonna use.
I thought Android Wear 2.0 is the OS, then why do I have to choose for API level? Does it means Android Wear 2.0 is just like a Version and it's actually using Android Marshmallow, Nougat etc? If so, then it's OK to chooshe SmartWatch which is running Android 5.1? and if so, what's the purpose of Android Wear 2.0?
Lastly, let's say I created my application in Android Wear 2.0, then it won't run in SmartWatch running Android 5.1? Assuming I've use and selected the minimum api of android marshmallow which is 5.1.
anyway, this device is what I'm thinking to get if it should be Android Wear 2.0 and this one if it doesn't have to be.
Background
Android Wear is based on the Android operating system. The first release of Android Wear 1.0 was based on Android Lollipop (5.0.1 to be more specific). The first release of Android Wear 2.0 was based on Android Nougat (7.1.1). More details about how the Android Wear releases maps to Android (proper) can be found here.
To your questions:
Which one should I get for development?
I suggest getting a device that's at least capable of running Android Wear 2.0. The most important thing is not which version the device is currently running, but how long it will receive updates (and thereby stay relevant).
It's also worth mentioning that the emulator has improved a lot over the last couple of years. You can develop a wearable app without actually having a hardware piece. With that said I still recommend investing in one if your goal is to release something on the Play Store, and in that case I recommend getting a device that is popular among your target users.
Why do I have to choose an API level?
Android Wear 2.0 is just another name for the version of Android 7.1.1 (API level 25) for wearable devices. For some reason Android Studio asks you to choose your target OS version based on API level instead of Android Wear version.