The word watershed refers to a "contiguous area draining into a single water body or a water course" or "it is a topographical area having a common drainage". This means that the rainwater falling on an area coming within a ridgeline can be harvested and will flow out of this area thorough single point. Some refer it as a catchment area or river basin.
A watershed is like a bathtub. The watershed outlet - the mouth of a pond, lake or river- is the tub's drain. The watershed boundary is the tub's rim. The watershed's drainage system consists of a network of rivers, streams, constructed channels, stormdrains, wetlands, and the underlying groundwater.