With neither Middlesbrough or Crystal Palace in action, the Hornets claimed all three points to move them into fourth place while Forest's play-off aspirations suffered a blow.
Gianfranco Zola's men have scored in every league game since November 6 and it was no surprise that they broke the deadlock when Vydra swept home his 17th of the season after 20 minutes.
An incisive pass through by Nathaniel Chalobah was picked up by Troy Deeney and he steered it across the face of goal for Vydra to apply the finish.
The hosts were offering little attacking threat and when they did push forward the Hornets punished them with a blistering counter-attack which led to the second goal 11 minutes before the break.
Manuel Almunia punched out a set-piece and Cristian Battocchio and Nathaniel Chalobah brought the ball out before Deeney released Vydra. The Czech striker neglected to shoot himself, instead feeding Deeney to rifle in a second.
Forest finally came to life and Simon Cox skewed his chance just wide before Dexter Blackstock somehow fluffed his lines just before the break.
Watford nearly had a fortunate third as Battocchio's cross soared over Karl Darlow and smacked against the crossbar.
Yet there was nothing lucky about Vydra's second as he made it 10 goals in his last five Championship starts 18 minutes from time.
Abdi picked out the forward with a through ball and Vydra kept his composure with Darlow coming out to meet him, lifting the ball over the stopper's head and into the net.