Watchmen is the creation of Alan Moore and Dave Gibbons, two creators who came to work on American comics during the "British Invasion" of the 1980s. The series came about as a reworking of a storyline pitch Moore made about the Red Circle superheroes but was eventually put to use with the recently acquired Charlton superheroes, including Captain Atom, the Blue Beetle, and the Question. Rather than permanently alter how DC Comics might use these characters, rough analogs were created, and Watchmen was set in a universe outside of DC continuity. More about the Charlton-DC connection can be found in this Toonopedia entry.
Set in the 1980s, Watchmen is set in an alternate, dystopian society where Richard Nixon is still president, the United States won the Vietnam War, vigilante superheroes have been outlawed, the Cold War still rages, and the US controls the balance of power via the services of Dr. Manhattan, a seemingly indestructible and omnipotent superbeing who can alter objects at the atomic level. The plot progresses as an investigation of the death of the Comedian, a former superhero who turned to working for the US government as an operative in international hotspots. The brutality and ease with which he was dispatched leads Rorschach, a rogue costumed detective, on the trail of a "mask killer" who is targeting former superheroes.
Watchmen was originally published as a 12-issue limited series beginning in September, 1986. Along with Frank Miller's The Dark Knight Returns, which was published almost simultaneously, it is credited (or blamed, depending on who you ask) for launching a different way of telling superhero stories with a more realistic, grittier sensibility. Some, such as blogger Curt Purcell, have pointed out how this change was already underway by the time of those two limited series but that their popularity and acclaim have lead to their being considered torchbearers. Regardless, Watchmen has received a great amount of praise, even from outside the comic book community. It is the only graphic novel to win the prestigious Hugo Award for Science Fiction work in Other Forms (in 1988) and is also the sole graphic novel on Time Magazine's "All Time 100 Novels."
There is a preponderance of information about Watchmen online. The Watchmen Wiki has a huge amount of information about the plot, characters, and world of the series, role playing game, as well as the film version. There is an Annotated Watchmen website chronicling many of the intertextual and historical references throughout the book. Here is a Slate article by Douglas Wolk about the book's and Alan Moore's impact on comics. Also, here is a clip of Alan Moore himself talking about Watchmen specifically. Dave Gibbons expresses his viewpoints about the series in this Publishers Weekly interview.
In 2009, a movie version of the graphic novel was released. It was directed by Zack Snyder, and as with many of his other works, Moore did not allow his name to be among the credits nor did he receive any royalties. In this interview with Wired Magazine, he expresses his views about how the story being suited ideally and solely to the comic book format led him to ignore all attempts at adaptation, even in the form of motion comics. Gibbons has no such reservations, as seen in this interview about his role in the movie's creation.
Moore was able to poke some fun at the potential commercialism that would accompany a Watchmen adaptation in a cameo appearance on The Simpsons, as seen in the still from the episode below:
Perhaps his concerns were slightly justified by solicitations for products related to the movie including Nite Owl coffee and electric blue Dr. Manhattan condoms that came in packages emblazoned "We're society's only protection."