How is water resistance for a dive watch determined?

When shopping around for a new dive watch, you will see they are designed for depth of the dive in meters or feet, which would be shown as 200-feet, or they have a pressure rating based on atmosphere, which would be indicated as 3ATM for instance.  While most divers never dive deeper than 130 feet, it would be beneficial to choose a watch with a water resistance level of 200 feet just in case.