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Your watchlist is a display for tracking changes, similar to the "New changes" display, but it only shows changes on your "watched" pages. You can see your watchlist by clicking "watchlist" in the top right if you are a registered user (someone with an account).
Before you see anything here, you must add some pages to your watchlist. Do this by going to a page which interests you, and clicking the "watch" tab.
The watchlist feature is most useful on a very busy wiki where the "New Changes" display changes very quickly. On a small wiki, you can normally see all of the editing activity on the "recent changes" page. But you can still watch pages and see changes to subjects you find interesting.
Normally people watch pages related to their interests or "good" and "very good" pages. If you make a big edit to a page, you might chose to watch the page to see if anyone changes what you edited. There is a "Watch this page" tickbox provided on the editing screen for this purpose.
On the watchlist display, some page names appear in bold. This shows whether or not you have visited the page to see the change, like a "read/unread" page in an email wikt:inbox. The "New changes" display will also have some bold, but for a different reason. There bold shows edits to pages on your watchlist.
See also Help:Tracking changes.