The form of Hungarian striker Tamas Priskin has been instrumental in making the Hornets arguably the division's form horse and he scored the winner, and his seventh in eight outings, on the stroke of half-time.
Earlier, fellow forward Grzegorz Rasiak had netted his second in as many games, but this was cancelled out by Matt Thornhill.
Watford went into the game with four wins from their previous five matches, and they got off to the perfect start in their quest to improve that record in the fifth minute.
Adrian Mariappa connected well with a Jobi McAnuff free-kick and the ball rebounded to the edge of the area where Ross Jenkins got the better of a challenge, sending the ball back towards the far post where the unmarked Rasiak rose above team-mate Priskin to net.
The home side really should have gone two up eight minutes later when Jack Cork picked out Don Cowie bursting into the area, but, with the goal at his mercy, the Scot volleyed wide from eight yards.
It looked like the home side might rue that miss in the 17th minute when Gary McSheffrey laid the ball back to Thornhill on the edge of the area, and he beat unsighted keeper Scott Loach.
But Watford deservedly regained the lead two minutes before the interval with a superbly-crafted second.
Full-back Lloyd Doyley played a fine ball to Priskin on halfway, who nodded the ball inside to Rasiak.
The on-loan Southampton striker then flicked the ball beyond the square Forest defence to send the Hungarian striker clean through and there was never any real doubt that he would fail to beat Smith to continue his purple patch.
Only the heroics of Paul Smith prevented Rasiak from scoring a second after the break, while the closest the visitors came to a point was a low drive from Gareth McCleary that Loach did well to push around his near post.