Watershed (global) sits in a layer's Detection section (Add > Operations (advanced) > Watershed (global)). It takes two images. The Seeds image marks where flooding starts: its non-zero pixels are the water sources. The Topographic Map is the relief, read with each pixel's intensity as its height, and it sets the priority with which the seeds grow.
Water from every source spreads over the relief, and where water from different sources meets, the engine builds a barrier. The set of barriers is the segmentation, and the result is a coded imageLoading... of events. An optional Mask limits the flooding to its white areas.
The word "global" has a specific meaning here. The engine considers the continuity of information from one field of viewLoading... to the next, which takes several passes, and Maximum iterations caps them. Stitch seeds handles seeds that continue across fields, and Remove seedless merged labels drops resulting events that aren't connected to any seed.
The classical NucleiLoading... engine is a separate matter. Its chapter in the Engines Reference doesn't describe its internal method or mention a watershed, so this page makes no claim about how Nuclei splits touching nuclei.