Source : Webster's Revised Unabridged Dictionary (1913)

Watermark \Wa"ter*mark`\, n.
   1. A mark indicating the height to which water has risen, or
      at which it has stood; the usual limit of high or low
      water.

   2. A letter, device, or the like, wrought into paper during
      the process of manufacture.

   Note: ``The watermark in paper is produced by bending the
         wires of the mold, or by wires bent into the shape of
         the required letter or device, and sewed to the surface
         of the mold; -- it has the effect of making the paper
         thinner in places. The old makers employed watermarks
         of an eccentric kind. Those of Caxton and other early
         printers were an oxhead and star, a collared dog's
         head, a crown, a shield, a jug, etc. A fool's cap and
         bells, employed as a watermark, gave the name to
         foolscap paper; a postman's horn, such as was formerly
         in use, gave the name to post paper.'' --Tomlinson.

   3. (Naut.) See {Water line}, 2. [R.]

Source : WordNet®

watermark
     n 1: a line marking the level reached by a body of water [syn: {water
          line}]
     2: a distinguishing mark impressed on paper during manufacture;
        visible when paper is held up to the light