S.A.
Men don't like to part with money (most of them anyway...mine doesn't have a problem unfortunately) so it could be a true act of contrition.
You contradict yourself because you say you are ready to put things behind you, but you are mad at him for "not getting it".
Honestly I think you are being petty...can you afford the watch? Then take it and wear it in a show of good faith. It shows that you are bigger than the problems you have had.
You said you are ready to move on and put the past behind you, but you then you mention "I'm also a little upset that he thinks this can make up for the past".....didn't you just say you are ready to move on. Then what does it matter if he thinks he can buy you a nice gift to apologize.
Is he doing any of the things that you talked about it counseling? Or was this gift the only act of contrition? Did he go to counseling with you or not? Has he been trying? Is he spending more time with you and the kids?
So take the watch, wear the watch, thank him for the beautiful watch and then say you accept his apology and that you don't need any more gifts just his love and attention.
Every man wants to feel important to their wives and kids. Every man wants to be the hero in his family. He's making effort.
Was it really that easy for him to spend big money on a nice gift for you? Is that what's bothering you...that it was just too easy? Well fine. Then tell him that you love the watch (grin and grit your teeth if you have to) and now the only thing you need is his love and attention...his actions speak volumes to your heart.
Don't say, I love the watch, but...
Don't say, You shouldn't have spent the money...or we should spend the money else where?
Sounds like you might be putting all the blame for you marital problems on him. Is he really all at fault. Is there something you could be doing better?
I would just take the watch and tell him you love him. Every time he does something for the kids comment on how great a dad he is becoming....If he does something you really appreciate...then comment that you really appreciate his efforts.....
PS...I understand where you are coming from...my husband insists on buying me flowers for different things. It drives me nuts. I like flowers, but they die. I would rather he spend the money on something else....maybe I would like to get my hair done or buy something for the house. I can think of a million better things to spend the money on and I've told him as much, but he's a man and he thinks NO...means yes.
Men are different. They are black and white, they are analytical, they don't think the same way we do. He didn't do what you would have done because he's not you. GIve him the benefit of the doubt....maybe he honestly thinks he's doing something great to show you just how sorry he is for the grief you have endured these past few months. Just accept his kindness and see what happens.
Really I don't think it's worth a fight. Just take the watch and try to use some reverse psychology to get the actions you are looking for.