Western Illinois (7-5), one of five Missouri Valley Conference playoff teams, next takes on fellow conference member Illinois State. Dayton (10-2) made its first playoff appearance since moving to Division I in 1993.
Dayton scored on Alex Jeske's 5-yard run in the first quarter but the Flyers turned the ball over three times in the red zone in the first half after having just one red-zone turnover all season.
Watson tied the game on a 7-yard run seven plays after the first of three Jeske interceptions.
Nathan Knuffman kicked a 27-yard field goal 11 seconds before halftime.
Sean McGuire threw touchdown passes of 22 and 9 yards to Lance Lenoir and Stacey Smith, respectively, in the second half. McGuire threw for 183 yards and was intercepted twice.