sass --watch is a command line instruction.
as you would do Jekyll serve --watch in your terminal window you can also use the sass commands.
If you haven't started using Sass yet then you might find it very handy. I'm very new to all this after being stuck in the Drupal / cms vein for a few years but started with Jekyll just a few weeks ago and discovered Sass about a fortnight ago.
Its fairly simple to get to grips with if you know a little bit about css as basically it's a quicker way to work with css files - you are essentially still writing css but without all the extra punctuation marks and curly braces etc. Or technically its a pre-processor that compiles all your css for you.
Also you can use includes so you don't have one big massive file of css to trawl through.
if you wish - have a quick peek at my Git and you can see the structure of the Sass folder pulling in the relevant files which then write everything to the css folder as one big stylesheet.
my practice Githttps://github.com/chipsandcurrysauce/fresh-start)
There are of course many tutorials about it on youtube etc or, as it is going off topic of your initial question here, I guess you can always start a new thread if you have any questions.
Jump into Sass and play with it! heh