Okay, let's think of it like this:
You know those paintings where there are different colors that don't mix together? Like a red strip and a blue strip next to each other, but they don't touch?
Well, think of a picture that has a bunch of those color strips that don't touch. Each strip is like a separate area of the picture, and they're called "regions."
Now, imagine that you're trying to separate those regions even more. You want to make sure that the reds stay separate from the blues, but you also want to make sure that all the reds are separate from each other.
That's what a watershed does. It looks at the different regions of the picture and decides how to divide them up even more. It looks for the points where the colors start to blend together and draws a line there.
So, instead of just having big, blobby regions of color, you have lots of tiny areas that are all separated from each other.
This is useful for a lot of things, like analyzing different parts of an image, or separating out objects that are all squished together.