A watermark stamps text or an image across every page — DRAFT, CONFIDENTIAL, a client name, a company logo — at a rotation and opacity you control. It marks a document's status in a way that survives printing, forwarding and screenshotting, which is precisely what a note in the covering email does not do. Two things it is worth being clear about: a watermark is a deterrent and a label, not a security control, and anyone determined to remove one from a PDF can. Its real value is preventing honest mistakes, like a draft being read as final or an internal copy being circulated as though it were approved. The stamp is drawn into the page content in your browser, so nothing is uploaded, and it applies to every page in one pass regardless of document length.
Opacity is the whole design decision
Too faint and it fails at its job — nobody notices it in print, which is where it matters most. Too strong and the document becomes unpleasant to read, so people work from an un-watermarked copy instead and the control quietly stops existing.
Somewhere around 15–25% opacity is usually the balance: clearly visible as a label, still comfortable to read through. Diagonal placement across the middle is conventional because it is hard to crop out and hard to overlook, and because it avoids the header and footer areas where real content usually sits.
What a watermark actually protects against
It is effective against confusion. A draft contract stamped DRAFT does not get signed by mistake. An internal pricing sheet stamped with the recipient's name is less likely to be forwarded casually, because the label makes the leak traceable in the mind of the person considering it.
It is not effective against anyone technically motivated. The stamp is page content, and page content can be edited or the page re-rendered without it. Treat a watermark as a label, and use passwords, redaction or simply not sending the file for anything that genuinely must not be seen.
Text or image
Text is right for status — DRAFT, COPY, CONFIDENTIAL, a date, a recipient's name. It stays crisp at any zoom because it is drawn as text, and it costs almost nothing in file size.
An image is right for a logo or a signed-off stamp, and needs a little more care: use a PNG with a transparent background so the page shows through, and remember it is embedded once and referenced by every page, so a large image adds its weight to the file only once rather than per page.