The watermark is drawn as text on a canvas, over your photo, in your browser. The preview is a reduced copy; the download repeats the same drawing on the original pixels, so nothing is resampled and everything scales with the photo.

font size   = 100 px × (photo width × size%) ÷ text width at 100 px
margin      = photo width × margin%
opacity     = canvas global alpha

Size is the width of the text, as a percentage of the photo's width, so a long name and a short one take up the same room. Very short text such as a single symbol becomes large.
Light or dark. White or black text with a faint shadow of the other colour, so it stays readable on mixed backgrounds. Lower the opacity for a quieter mark.
Tiled repeats the text in staggered rows at 30 degrees across the whole photo, which is harder to crop out. The position grid is ignored while tiled.
A watermark does not stop copying. It discourages casual reuse and shows where a picture came from; anyone with editing software can remove or crop it.
Format. JPEG is saved at quality 92, a fresh lossy encode. PNG avoids that with a much larger file. Camera metadata and colour profile are not carried over.

Photo watermark tool

The method behind the numbers.