Where can I find instructions on how to create and edit a watchlist?
There are a few options for watching a region of the map:
openstreetmap.org offers a history tab on top of the map. This will list the last changes in the area, similar lists exist for each user. There seems to be an RSS feed, but I haven’t used that one yet, so I can’t tell how useful it is.
The history tab has a problem when edits have large bounding boxes, though - these often don’t actually affect the area, but are listed nevertheless. They are marked as “big” edits.
the company ITO offers an online service that lets you create a watch list containing regions of interest to you (among other things). RSS feeds are available. Notifications are sometimes delayed and limited to ways (no nodes or relations), but it’s still an useful tool.