Before using this Automator feature, you will need to turn on "Access for assistive devices." So head over to System Preferences > Universal Access. Make sure the checkbox is checked beside "Enable access for assistive devices." This allows Automator to control your mouse and keyboard movements/clicks/key presses. Watch Me Do will not work unless this box is checked.
Recording an Action in Automator
You are now ready to start recording your first Watch Me Do action in Automator. This feature gives Automator additional functionality if a prebuilt action is not readily available. So, before you go creating your own Watch Me Do action, look through the action list to make sure the functionality doesn't already exist.
When you are ready to record, press the "Record" button in the top-right corner of the window. The main Automator window will disappear, and you will see a heads-up display on the screen showing that Automator is recording; this display will also have a stop button -- when you are done recording your actions, you press this to return to the main Automator window. While recording, any mouse movements/clicks and key presses will be captured and added to your workflow.
Managing your recorded events
Each time you click, press a key, or move the mouse, you create an "event." Once you have recorded your Watch Me Do actions, you can reorder the specific events of the action. Just click and drag in the "Events" section. Be careful though, as some rearrangements can render the action workflow useless (i.e. reordering a click of a button before a specific dialog is displayed).
In the Watch Me Do action, you can also select a Timeout in seconds, and set the playback speed. Before changing these settings, note the defaults: Timeout is set to 0 seconds, and Playback Speed is set to 1x.
Read on to learn about running, saving, and get some tips about recording.