Why are they called watermarks?

Because a watermark in paper looks like a wet spot, and around 1708 English speakers assumed water had made it. It hadn't. The mark is made by wire, and the name stuck anyway.

Wire, not water

Around 1282, papermakers in Fabriano, in Italy, began sewing bent wire onto the screen they formed sheets on. Fewer fibres settle where the wire sits, so the paper ends up thinner there. Hold the dry sheet to a window and the thin part passes more light: the design appears.

That is the whole mechanism. It isn't printed on and it can't be added afterwards — the mark is formed while the sheet is, which is why a photocopy loses it and why mills used it as a signature. A watermark told you who made the paper, and often in what year.

The English word arrives four centuries later, and it was a guess about cause. The mark is less opaque than the paper around it, so it looked like the work of water. French and Italian picked the better word and kept it: filigrane, filigrana, "wire figure", which is exactly what it is.

How the name reached computers

The word was borrowed for digital files around 1990 — usually credited to Komatsu and Tominaga in 1988, sometimes to Tirkel and colleagues a few years later. One idea carried across intact: a good watermark is in the content rather than on it, and invisible until you hold it up to the right thing.

What the word stopped meaning

• A paper watermark is the same on every sheet from that mould. A digital one can differ in every copy, so it can identify a recipient rather than a maker.
• A window reads a paper watermark. A digital one needs a detector, and for AI-generated text and images that usually means the detector belonging to whoever built the model — which is often not something you can get hold of.
• On paper, no watermark meant plain stock. Digitally, absence means nothing. A mark can show a file came out of a particular system; it can't show who wrote the words, and unmarked text tells you neither way.

More on what the AI ones actually do: AI watermarks explained.