Howdy,
These 'watches' that you refer to are known as 'Acti-watches'. An Acti-Watch is an actigraphy-based data logger. Basically, actigraphy is a way that sleep patterns, quality, etc are assessed and monitored.
They technically record:
Sleep/Wake Patterns
Sleep Disorders
Circadian Rhythms Disorders
Basic Activity Levels
Compliance with Exercise Routines
Thar, hope that clears it up
Marky