When a watch is adjusted it means that it is been adjusted to keep running as accurately as possible, regardless of for instance the temperature, body movements or how much the watch is winded. The term ‘adjusted’ applies to mechanical watches only.
The three critical adjustments are for
1. Position: a wrist watch moves as your wrist moves,
2. Temperature (the ability to keep good time over a range of different temperatures)
3. Isochronism (the ability to keep an even rate over the life of one spring wind, typically 24 hours). An un-adjusted watch should run reasonably constant in two to three positions (for a pocket watch dial up, pendant up, pendant left/right) as these are the most common positions the watch would encounter either in the pocket, or on a table at night. High grade watches are adjusted to five positions or more.