Adding a watermark and annotating a screenshot are the same operation underneath: draw something on top of an image and flatten the result to new pixels. What separates them is what happens if you get it wrong.
Compositing is one-way
Every one of these produces a flat raster. There are no layers in a JPEG or a PNG. Once the text is drawn, those pixels are the text, and there is no undo beyond starting again from the original.
So the rule that covers both: keep the original. Export the annotated version under a new name. This sounds obvious and is the single most common regret, usually discovered when someone asks for the same screenshot without the red circle.
Watermarks, and what they are worth
A watermark is a claim of provenance, not a protection. Anyone determined can remove one, and modern inpainting makes it easier than it used to be. What a watermark reliably does is stop casual reuse and make the source obvious when an image travels without its caption.
Given that, placement is the whole decision.
- A corner mark is tidy and removed by cropping in about three seconds.
- Across the middle at 10 to 20% opacity is intrusive and actually survives, which is why proofing and stock-preview watermarks all look like that.
- Tiled across the whole image is the most resistant and the least pleasant to look at.
Pick based on whether the image is a portfolio piece you want seen, or a proof you do not want used before payment. Those want opposite answers.
For a logo watermark, use a PNG with real transparency. A logo on a white rectangle looks like a sticker.
Annotating, and the redaction difference
Drawing on an image is for showing someone where to look: an arrow at the broken button, a box around the error, a highlight on the clause that matters.
There is one important difference from doing the same thing in a document.
So a screenshot is one of the few places where a black box is real redaction. Two caveats still apply. Blurring and pixellation are not the same as a solid fill, and both have been reversed on text in practice, so use an opaque block rather than a blur for anything that matters. And check the rest of the frame: browser tabs, notification banners, bookmark bars and the taskbar clock leak more than people expect.
If you need a blank canvas rather than an image to mark up, the drawing board is the same idea without a photograph underneath, which is often the faster way to sketch a layout or an architecture diagram for someone.
Before you send it
Open the marked copy at the size it will actually be seen. Check that the watermark or the arrow says what you meant without covering the detail that matters, then send that copy and keep the original. The watermark tool handles text marks in a corner, the centre or tiled across the picture, and the drawing board has the arrows, boxes and highlighter that annotation needs.