This watch had significant implications for Joel's character, played by Pedro Pascal in The Last of Us TV show's cast, as it tied his past and present together. With Abby killing Joel in season 2, the watch becomes even more important, as it's a sentimental belonging that represents not only Sarah's, but also Joel's, death. It's worth breaking down the matter further, as it's closely tied to the show's themes of life and death, and how characters grieve.
Joel Kept Wearing His Broken Watch Because It Was A Gift From Sarah
Sarah Fixed The Watch For Him As A Gift, But He Broke It Again
Joel's watch, still broken in the present day, reveals how he has coped with the trauma of his daughter's death and the outbreak. The watch is heavily tied to Sarah, due to how much Joel appreciated her getting it fixed for him, and it serves as a metaphor. The watch still being broken indicates how broken Joel himself was over Sarah's death, over 20 years after it happened.
Ellie Quickly Notices Joel's Broken Watch In The Last Of Us
Ellie Is The Best Thing To Come Into Joel's Life After Sarah Dies
The second overt mention of Joel's watch came in The Last of Us season 1, episode 1. After Joel and Tess agree to smuggle Ellie outside the Boston quarantine zone, Joel and Ellie return to his apartment to rest while Tess scouts their way out of the QZ. Just before sleeping, Ellie says to Joel, "Your watch is broken." This causes Joel to fall asleep to the nightmarish sounds of Sarah's death, demonstrating the direct correlation the watch has to his trauma.
While Joel never fixes the watch, he becomes much more open and vulnerable with Ellie, speaking more plainly about his relationship with Sarah.
The watch is so intrinsically linked to Joel's relationship with Sarah, so Ellie pointing it out sets up the fact that, eventually, Joel will come to see Ellie as a daughter, helping him heal from Sarah's death. While Joel never fixes the watch, he becomes much more open and vulnerable with Ellie, speaking more plainly about his relationship with Sarah.
Joel Was Wearing His Broken Watch When Abby Killed Him In The Last Of Us Season 2
Joel Died Wearing His Daughter's Final Gift To Him
Joel's death in The Last of Us season 2, episode 3 is easily the show's most devastating moment, with audiences forced to watch as Joel is mercilessly beaten with a hockey stick, and Ellie is forced to watch as her adoptive father is killed. It's important to note that Joel is wearing the watch while he's killed by Abby, leaving it on his body for Tommy to find in the following episode. In a sense, both of his daughters were with him as he died, as Sarah's gift was still on his wrist, and Ellie was physically there.

Tommy's Reaction To Seeing Joel's Watch & Why He Saves It For Ellie
Tommy Knows What The Watch Meant To Joel
After Joel's body is recovered and returned to Jackson, The Last of Us season 2, episode 3, offers a scene where Tommy inspects his remains before burial. Tommy notices the watch still on Joel's wrist and says, "Give Sarah my love," since he knew it was a gift from her. This is a poignant moment where Tommy recognizes that, though Joel might have passed, he can finally reunite with his daughter after so many years. At least, that's what Tommy hopes.
Rather than keeping the watch for himself, Tommy leaves it in a box along with Joel's revolver for Ellie to discover. Given that the watch is broken, he has no use for it, and he passes it along to Ellie as a sentimental object. Joel's first daughter gave him the gift, and his adoptive daughter can hold on to it for him as The Last of Us continues.