Etymology
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watershed (n.)

"line separating waters flowing into different rivers," 1803, from water (n.1) + shed in a topographical sense of "ridge of high ground between two valleys or lower ground, a divide," perhaps from shed (v.) in its extended noun sense of "the part of the hair of the head" (14c.). Perhaps a loan-translation of German Wasser-scheide. Figurative sense is attested from 1878. Meaning "ground of a river system" is from 1878.

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Definitions of watershed

watershed (n.)
a ridge of land that separates two adjacent river systems;
Synonyms: water parting / divide
watershed (n.)
the entire geographical area drained by a river and its tributaries; an area characterized by all runoff being conveyed to the same outlet;
Synonyms: river basin / basin / drainage basin / catchment area / catchment basin / drainage area
watershed (n.)
an event marking a unique or important historical change of course or one on which important developments depend;
the agreement was a watershed in the history of both nations
Synonyms: landmark / turning point
From wordnet.princeton.edu