Watson said the supplement saga had taken an "enormous toll" on Reid and he was delighted the charges were withdrawn.
As for the toll on the club, Watson said recovery would be slow.
"I think it is going to take time for the club to move on properly," he said on Wednesday.
"[But] I think it is great for Bruce. I have known Bruce for 30 years and I know how much of a toll this whole thing has taken on him and to be exonerated like that, I think it's fantastic.
"He is not just a club doctor he is a loved figure at the club. He is a great doctor; he is the family doctor to so many players that have been part of the Essendon Football Club over 30 years.
"I'm really happy for him – I know it has taken an enormous toll on him. It was something he didn't deserve as an individual so I am just really pleased for him."
CEO of the AFL Medical Officers Association Dr Hugh Seward said the decision to withdraw Reid's charges would allay doctors' fears of working for an AFL club.
Seward said the decision would also prove important for the future provision of medical care in the AFL.
"The outcome is really important for us in that it reassures doctors that they play an important role, and a respected role, in clubs," Seward said.
"The importance of clubs having good processes means that the doctor might not be as frightened about taking on an AFL role as they perhaps might have been when they were watching the machinations of what Bruce was going through."
Seward said the Essendon saga would reinforce the need of clubs to have their doctors central to all medical decisions.
"The whole process has been a great awakening for all clubs."
Seward said Reid would take a well-earned break and return reinvigorated in January next year.
