Both sides headed into the game unbeaten in the first four games with City in second place with 10 points and Watford in fourth with 8. However, it was City who cruised to victory to put themselves top of the league until at least tomorrow.
The visitors burst out the traps straight away in a sign of what was to come. Walker burst down the right and released Sterling, but his cut back for Silva was blocked by Jose Holebas.
City totally dominated the opening stages as Fernandinho directed a shot straight at Heurelho Gomes from the edge of the box and Kevin De Bruyne released Sergio Aguero down the right, who attempted a lob which had Gomes scrambling but just landed on top of the goal.
It was attack against defence in the first half as Sterling was played through by De Bruyne but Kabasele saved Watford with an excellent last-ditch challenge.
Watford had a chance to take the lead against the run of play but Richarlison headed just wide from inside the City box after a brilliant free-kick from deep by Holebas.
After 27 minutes Guardiola's side finally made their extended period of dominance count. Aguero showed Richarlison how it’s done, by heading into the corner from a free-kick by Kevin De Bruyne. There was a hint of offside as Aguero advanced ahead of the defence before the free-kick was taken but it was a close-call and the linesman gave the forward the benefit of the doubt.
Just four minutes later, Man City found themselves two goals to the good, scoring with their next chance. Gabriel Jesus found David Silva inside the box, and Aguero was on hand to tap in from close range after the Spaniard’s cut-back went through the fingers of Gomes.
The away side were rampant at this point and scored their third after just 38 minutes. Aguero threaded the ball through for Jesus, who was standing in an offside position, but he fired across Gomes to make it 3-0 and the linesman’s flag was never raised. Whilst Watford can’t dispute that City were good value for their first half lead, they will be annoyed about the two goals which could have been ruled out for offside.
Watford managed to keep the score at 3-0 for the final few minutes before the referee brought an end to a very one-sided half.
The second half seemed to start in a more positive fashion for the hosts as Andre Carrillo's right-footed volley across goal went just wide from inside the box, but City still looked lethal on the counter attack.
City put to bed any hopes of a possible Watford revival when David Silva whipped a fine delivery into the box following a short corner and Otamendi powered a header past Gomes to make it 4-0 after 63 minutes.
Etienne Capoue, a second-half substitute had a great chance to reduce the deficit for the Hornets but he somehow headed over after a corner was flicked on by Richarlison at the near-post.
The away side were not content with just four and Aguero wanted his hat-trick. The Argentinian weaved his way through the Watford defence and flicked the ball past Gomes. Adrian Mariappa tried to clear the ball after it struck the post but it had already crept over the line to secure Aguero's 10th Man City hat-trick and ninth goal in five games against Watford.
The Man City pressure did not let up and Guardiola's side did not want to settle for back-to-back 5-0 wins in the Premier League. Raheem Sterling saw a left-footed drive deflected just wide of the post before he was brought down in the box by Christian Kabasele in the final minutes. The English winger calmly converted from the spot to make it an emphatic 6-0 win.
City were impressive in all areas of the pitch and totally dominated a Watford side who were flying high before today's game. The decisive scoreline sends a message to rivals Manchester United, who were only top on goal difference before this weekend's round of games.
Watford had nothing to offer and can have little complaint about the scoreline, despite the two first-half goals which appeared to be offside, and will hope to bounce back from the humiliating defeat and carry on to build on a largely positive start to the season.
The 6-0 scoreline rounds off a perfect week for Guardiola, as his side overcame Liverpool with a 5-0 victory last weekend and beat Feyenoord 4-0 in midweek.