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So the problem is the watch is merged when using local layers, but the merge is using the relative path from project srcDir and so any watch configured inside the layer will not be matched, you need to add the watch entries from the layer in the project watch adding the relative path (for example ../layer-1/a.ts or ./layer-2/b.ts: these 2 paths will be included as a.ts and b.ts and will never match the corresponding layer watch).

If we use the watch from the layers previous problem is solved, since the path will be relative to the layer srcDir.

On investigation, the change to absolute paths was a regression, now fixed in #22333. I think that means we should normalise watched paths to absolute in schema (as you're doing), and then re-normalise them to absolute and compare them against absolute path in nuxt.ts.

I think we shouldn't need to do this per layer, but directly using nuxt.options.watch because if we normalise in the schema, the layer watch paths should already be resolved in relation to the layer directory.

Would you be able to update the PR, or would you prefer me do it?

Would you be able to update the PR, or would you prefer me do it?

I'll try...