Watermark is a text or a picture that appears behind the text. It is used for printed documents. A user can add watermarks such as Draft, Confidential, Preview, etc. A watermark does not interfere with the written text and is placed in the background in a very light color. It tells the status of the document such as Draft.
Document background is a color or a picture that appears in the background when the document is viewed in Web Layout and other views, except Draft View and Outline View. It enhances the appearance of the document. Any picture, texture, patterns, or solid colors can be used as a document background.