But a double substitution at the interval paid dividends as Joe Thompson crossed for fellow substitute Adam Rundle to fire home the equaliser from close range after 55 minutes.
Watson said: "Many people say Rochdale play some of the best football in the division and we wouldn't argue with that, but it was a game of two halves and we should have been out of sight at half-time. We could have been two, three or four nil up if we had taken the chances as we should have done.
"I don't know if they necessarily shut up shop after the break, but we didn't use the ball or pass the ball or create chances as we had done in the first half and we actually looked a bit vulnerable towards the end.
"People go away from here and say that Luton try to play the right way by passing the ball and keeping possession and that can be quite difficult in League Two as it's often harem-scarem, crash, bang, wallop stuff."