Watermarks were used in Italy by 1282. The origin of
watermarks is not known.
The most common type of watermark can be seen when the paper
is held up to the light. The watermark is created by a raised design on the
mold.
The “shaded” watermark is rarer. There is a depression in
the sheet mold wire, which results in a greater density of fibers. There is a
shaded, or darker, design when held up to a light.
Watermarks can be used to identify the manufacturer or the
grade of paper.
Watermarks can be used to detect and prevent counterfeiting
and forgery. Some currency has a watermark to prevent counterfeiting. When I
deposit my paycheck, the scanned image shows “VOID” all over the check to
prevent copying.
Sources: Meggs’ History of Graphic Design, Merriam Webster,
Encyclopedia Britannica.