It might be a victim or a target. In a crime - related story, the person who is about to be a victim of a crime or is the target of a villain's scheme could be the 'watched someone'. The villain might be watching their every move to find the perfect time to carry out their plan.
I'm not sure specifically as I haven't read 'the watched story' myself. It could be about a story that has been observed or followed closely by someone.
I really don't know. The basis of 'The Watched' could be anything from a fictional concept to a combination of various elements. Unfortunately, I can't provide a specific answer at the moment.