The winning goal sent Van Gaal's men level on points with Manchester City, who lost 3-0 at Liverpool, while Tottenham and Arsenal also suffered defeats at West Ham and Swansea, respectively, to throw the race for Champions League qualification wide open.
"It's fantastic," Van Gaal said. "That's the strength of the Premier League.
"It's also nice as we lost at Sunderland and there was a lot of criticism at that time but the difference between teams is not that big. Everybody can lose to everybody."
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Ander Herrera says Manchester United have to learn to win when not at their best
The victory was United's fourth straight success in all competitions, but they struggled for long periods as Watford played an aggressive game at Old Trafford and created plenty of opportunities.
Eighteen-year-old defender Timothy Fosu-Mensah was one of two changes made by Van Gaal as he became the third-youngest player to start a game for United in the Premier League and he stood strong up against the dangerous duo of Troy Deeney and Odion Ighalo.
United's manager was delighted with the way his young side dealt with the threat that Watford offered.
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Watford boss Quique Sanchez Flores says his side played well
"I'm so happy for the players as the circumstances weren't very good for playing good football," Van Gaal added. "It was more a physical game. They were twice the size of our players.
"I'm very proud of my team as to beat Watford is a fantastic result and also at the moment our competitors are losing.
"When you win four times in a row, it is always good. We are in three competitions, but we have a problem as we have a very small group and a very full programme. It's difficult."