The simple definition:
It's the area of land that catches rain and snow and drains or seeps into a marsh, stream, river, lake or groundwater.
 
You're sitting in a watershed now!
Homes, farms, ranches, forests, small towns, big cities and more can make up watersheds. Some cross county, state, and even international borders. Watersheds come in all shapes and sizes. Some are millions of square miles, others are just a few acres. Just as creeks drain into rivers, watersheds are nearly always part of a larger watershed.

This information was provided by the Conservation Technology Information Center (CTIC) additional watershed information can be found by visiting their website at http://www.ctic.purdue.edu/.

To identify your watershed visit EPA’s Find your watershed website.
http://cfpub.epa.gov/surf/locate/index.cfm