I’ve used it (for sneakers) and yes that’s how it works. You buy the item, seller ships it to eBay for authentication, ebay ship it to you, or indeed if the watch isn’t as described, or fake, they will refund you and send the phoney watch back to the original seller.
It’s a pretty quick process all told, and while I’m sure there are stories of the odd one slipping through, it’s certainly a lot safer than it was before. Buy the seller and all that.