Watchlists are a way for registered users to keep track of specific items on the site. Almost anything can be put on your watchlist, including all articles, discussions, images and links, but also categories, products, properties and attributes. To add one of these items to your watchlist, simply go to the item in question and click on Add to my watchlist. For categories, products, properties and attributes, this link is found under the Settings tab.
The next time you visit the item in question there will be a count as to how many edits have happened to the item since you last marked it. You can then mark the item as read by clicking on the number.
To quickly see what items are on your watchlist, navigate to your user page, and click on Watchlist tab. From here you can get a brief overview of the items you're watching as to how many edits there have been, when the last edit was etc. This list is also the area where you can remove items from your watchlist.