Watermarking works by using statistically significant word combinations, successful already starting in snippets from 100 words.
OpenAI’s text watermarking prototype already works. In the plainest English, after the GPT model has generated a response, there will be a layer on top that shifts words/tokens very slightly and consistently. This is the output that will be given to the user (via API or Playground).
This output can be measured and checked later by OpenAI/government/potentially others.