As a general rule, b2evolution generates thumbnails of all the images that you attach to a post ( more information about this subject can be found in this page: Caching and Cache Levels ), and the Watermark Plugin lets you add watermarks to those thumbnails.
Note: The goal of the plugin is only to watermark the generated thumbnails with a watermark that stays visible no matter the size. Very small thumbnails will not be watermarked. The originals are not watermarked because the thumbnail would be scaled down in the thumbnails (real site images) and it would look bad.
This plugin has per-collection settings, which means that its settings may be defined globally and also individually for each collection. The default global settings form, including its default values, is shown in the image below and listed as following: