The Smart Watch is a piece of equipment Division agents carry in Tom Clancy's The Division and Tom Clancy's The Division 2. The single most iconic and identifiable piece of kit an agent carries, the watch - with its signature glowing orange outline - serves as a means of communication between agents and as the nexus for most all of an agent's personal functions and technology, including projecting an augmented reality heads-up display (AR HUD) for various features and points of data. All communication is done via the smart watch and a communications relay device, known as an ISAC Brick, typically attached to a field agent's backpack, which will also glow orange.
Unless otherwise abandoned or stolen, all Division agents wear their Smart Watch on their person at all times. This includes inactive agents, though it will not glow orange for those not on active duty. An agent will know they are activated when their watch begins glowing orange; when that happens, they are expected to drop everything and respond immediately, answering the call of duty without fail. Typically, civilians will not recognize an inactive Smart Watch for what it truly is.
As mentioned, the Smart Watch is an active agent's most identifiable piece of hardware. Allies, enemies and civilians alike can learn to identify a Division agent on sight just by looking for the glowing orange watch. Enemies will come to attack anyone on sight wearing one, and some - including the Hunter - consider the watch a trophy to be claimed.
When an agent goes rogue (or their tech is otherwise maliciously compromised), their watch will glow red instead of orange.