This plugin implements the watershed algorithm using seeds. The first image is the seeds from where the "water" will rise. When two floods from two or more seeds will meet, a border is drawn to delimitate the different regions around the seeds.
Typical applications are segmentation and object separation.
For segmentation, you can use seeds as brightest point inside object, using local maxima (use FastFilters3D to detect them). Then based on intensity the objects will grow round the seeds, but the objects will not merge. You can also use darkest point as seeds in a edge image.
For object separation, first threshold your objects, some will be merged, then apply a distance transform. Use the watershed with local maxima from distance transform as seeds and the distance transform for signal. You can increase the radius of local maxima detection in order to fuse close local maxima and then avoid oversegmentation.