Short version: Watchmen was a twelve-issue series of comics published by DC Comics between 1986 and 1987, written by Alan Moore and drawn by Dave Gibbons, that aimed to bring a new level of realism to superheroes.
Longer version: Originally the result of Moore looking to revitalize characters purchased from the defunct publisher Carlton Comics for DC Comics - characters who later found their way into the regular DC Universe such as the Question, Captain Atom and Peacemaker - in a similar way to which he had approached Swamp Thing and Marvelman/Miracleman (both of which he has won industry awards for), Watchmen grew in terms of scope and ambition as Moore and Gibbons worked on the series, eventually becoming a series that would redefine the superhero genre forever... much to the creators' upset. Aiming to create, in Moore's words, the superhero version of Moby Dick, the two veterans of British SF comic 2000AD set out to make a book that required multiple re-readings and tried to redefine the technical boundaries of the comic medium; the series is structurally complex in ways that are still groundbreaking, from the metatextual comic-within-the-comic Tales From The Black Freighter to the complex use of visual metaphors throughout the book (most obviously in the fifth chapter's visual symmetry).
Sadly, neither the technical brilliance nor the ambition of the creators became the lesson learned from Watchmen's success; instead, the book - and Frank Miller's The Dark Knight Returns, also published by DC in 1986 - ushered in a spate of "grim and gritty" superhero stories that aped the story's tone without understanding the intelligence, or humanity, that lay underneath. Moore has since decried Watchmen's influence within the genre:
The gritty, deconstructivist postmodern superhero comic, as exemplified by Watchmen, also became a genre. It was never meant to. It was meant to be one work on its own. I'd have liked to have seen more people trying to do something that was as technically complex as Watchmen, or as ambitious, but which wasn't strumming the same chords that Watchmen had strummed so repetitively. The apocalyptic bleakness of comics over the past 15 years sometimes seems odd to me, because it's like that was a bad mood that I was in 15 years ago. It was the 1980s, we'd got this insane right-wing voter fear running the country, and I was in a bad mood, politically and socially and in most other ways. But it was a genuine bad mood, and it was mine. I've seen a lot of things over the past 15 years that have been a bizarre echo of somebody else's bad mood. It's not even their bad mood, it's mine.
Nonetheless, the book was a critical and commercial success unlike any other. A multiple award-winner within the comic industry, the book has also been recognized in the mainstream; Time Magazine called it one of the best 100 English-language novels written since 1923 and Entertainment Weekly said it was "the greatest superhero story ever told" and one of the best 50 novels of the last 25 years. The collected edition has remained a top seller since it was released (outselling every other graphic novel released last year, for example), and it will likely always be one of - if not the comic that other superhero comics will be compared with in terms of content, technique, and critical and commercial success.