1 a : a dividing ridge between drainage areas
b : a region or area bounded peripherally by a divide and draining ultimately to a particular watercourse or body of water
2 : a crucial dividing point, line, or factor : turning point
"Historians generally agree that the battle was a watershed in the war."
"Penn State's 38–29 win over previously unbeaten Northwestern felt like a watershed, the end of purgatory at the very least." — From an article by Mike Gross in the Intelligencer Journal/New Era (Lancaster, Pennsylvania), October 8, 2012
Opinion on the literal geographic meaning of "watershed" is divided. On one side of the debate are those who think the word can only refer to a ridge of land separating rivers and streams flowing in one direction from those flowing in the opposite direction. That's the term's original meaning, one probably borrowed in the translation of the German Wasserscheide. On the other side of the argument are those who think "watershed" can also apply to the area through which such divided water flows. The latter sense is now far more common in America, but most Americans have apparently decided to leave the quarrel to geologists and geographers while they use the term in its figurative sense, "turning point."