Marking a document with who it went to, or what it is for, is a simple way to discourage it travelling further than intended.
CONFIDENTIAL tells a reader nothing they did not assume. A mark that reads with a name and a date tells anyone holding a copy exactly where it came from, which is what actually changes behaviour.
If you send the same document to several people, mark each copy differently. A leaked document then identifies its own source, which is the entire reason organisations do this.
Always keep an unmarked original. Watermarking writes a new file, so your clean copy survives, but it is worth being deliberate about which one you file and which one you send.
The most useful mark says who the copy is for and when, for example Prepared for J Smith, 12 October. It can be up to 40 characters. A mark with a name on it discourages passing the file on, because a leak can be traced to a copy.
Keep the faintness near the default of 22 percent and the angle at 45 degrees. Tick Repeat it across the whole page if you want it to be hard to crop out. Grey sits well on most documents, and red stands out more on a draft.
By someone determined, yes. It is a deterrent and a trace, not a lock.
Set the opacity so the page stays readable. Most people go too dark on the first attempt.
No.
Up to 40 characters, which is enough for a name and a date.