It may have been dry most of the year or it may have flowed continuously. Water from a few acres drained into that little stream. Those few acres were its watershed. This small stream and others like it ran into a larger one. The land areas drained by the small steams made up the watershed of the larger stream into which they flood.
Small watersheds make up the larger ones.
The Mississippi River, for example, drains a watershed of about 1,243,000 square miles. This large watershed is made up of thousands of smaller ones. So wherever you live you are in a watershed. It can be just your own backyard or the area drained by a small creek or by a large river. You and the other people who live in the watershed are part of the watershed community.