With afterwards shortening of your vowel. The meaning "a divide of land" (perception 2), attested earlier in watershed (18th century) seems being an outgrowth of before physical senses on the word, as "the part of one's hair" or "a passageway among the threads of a warp over a loom," although https://decormedley.com/maximizing-storage-space-the-duramax-sidemate-4x8-plastic-shed/