Hi,
In Special:Preferences, would it be helpful for the "Email me when a page or file on my watchlist is changed" option to appear in either the Watchlist tab, or the Notification tab, or both? Users are likely to try one of those tabs if they want to be notified that something on their watchlist has changed.
Topic on Project:Support desk/Flow
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Agreed, the current situation is terribly confusing. I'm trying to bring that stuff together in a single tab, see bugzilla:63577.