As its name implies, word watchdog is an automated agent which checks newly detected posts for the occurance of special word or phrase in their content and notifies you of those occurances so that you can quickly read those caught posts.
While word watchdogs work like virtual channels, there is a fundamental difference between them. While virtual channels gather those matched posts from their originated channels into one bucket, word watchdogs keep pointers to those posts so that you can reach them till you close Newzie.
In other words, word watchdogs act like temporary containers from where you can reach those caught posts. When you close Newzie, those pointers kept inside word watchdogs are removed without deleting actual pointed posts.