The City Watch is the Bronze Dawn equivalent of the Town Watch Guild, whilst replacing the Outpost with regards to an early-warning system building. City Watch buildings have extensive LOS and the ability to spot hidden units, thus making them ideal as buildings to defend against spies and/or ambush units, such as UUs belonging to southern factions. Spies and Scouts must be trained from the City Watch.
The upshot of the City Watch however is that while they are useful at what they do, they cost a fair bit to build, and can't be built outside of a city radius. This means that while they are effective at policing cities, your smaller settlements will remain exposed to subversive activity or sneak attacks.