Watersheds or drainage basins can be defined as the areas where the water from precipitation collects and then drains off to a common place, such as streams, rivers or lakes.
Watersheds are divided by continental boundaries. These are the geographical boundaries and have no relation to the set political boundaries.
Watersheds collect the precipitation as well as surface water and acquifiers. They include the runoffs too. All of this is leads to a common outlet.
Watersheds can be small as well as quite big. There is no limitation to their sources and outlet. Thus, the statement 'watersheds are limited to bays, lakes, rivers, and other large bodies of water' is not correct.
Hence, the correct answer is option c.
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