To dream that you are watching someone or something indicates your passiveness. You lack initiative to take a position or to take action. It may reflect upon your real life and how you are watching life pass you by, instead of participating in it. You need to take more initiative. Alternatively, the dream symbolises your neutrality in some situation. You do not want to take a side. The dream may also be a metaphor warning you to “watch it!”
To dream that you are being watched suggests that you are feeling confined in your work environment or personal relationship. You are lacking privacy and feel you are being scrutinized or criticized.