In wiki terms, an unwatched page is a page which doesn't appear on anyone's Watchlist. That is, it isn't followed, so no one is getting email alerts when it gets changed. Theoretically, this might mean that edits to an unwatched page might go unnoticed for a very long time.
Because this report lists only the top 1,000 pages, it's of limited use on a large wiki like Tardis. It could be that tens of thousands of pages are on this list, but cannot be displayed. Thus this report does not describe a problem that you can do anything about.