The difference is that a weather watch indicates that hazardous weather may occur, while a warning is issued when hazardous weather is occurring, is about to occur or has a very high probability of occurring.
A warning indicates that conditions pose a threat to life or property, and people in the area of the warning should take action to protect themselves. A watch is intended to provide people with enough time to set safety plans in motion for possible hazardous weather.
Watches and warnings outline areas where the weather may occur. Pinpointing the location of hazardous weather in advance is extremely difficult. For this reason, watches are usually issued for large regions, sometimes covering several states. Warnings are issued for much smaller areas, often only a county or two, because they are based on actual observations of hazardous weather.
The National Weather Service issues weather watches and warnings under specific weather conditions.
A severe thunderstorm watch means that conditions are favorable for the development of severe thunderstorms in and close to the watch area.
A warning means that a severe thunderstorm has been sighted visually or indicated by radar, and that the thunderstorm is producing hail at least 3/4 of an inch in diameter and/or has winds equal to or exceeding 58 mph.
Then there are weather advisories, which may be issued when actual or expected weather conditions are not hazardous but may cause inconvenience or concern.