Can do, although you might be better off using a hard conformal compound (black stuff used for potting electronics) where possible. It has a lower viscosity and is less prone to bubbles. I'm not sure how much small bubbles would actually affect it, though.

There's one other good reason to use conformal coating: it has very little change in size when it dries. There are a few spots on the board that would be affected by that, most importantly the load capacitors for the timekeeping fork. Ceramic capacitors have a piezoelectric effect and change shape ever so slightly (they stretch and squash, alternately contracting around their midsection and then expanding). It's not enough to break the solder or the epoxy but if you pot them it changes their apparent capacitance, which will change the frequency of timekeeping. Probably not enough to matter, but still measurable. Large inductors have similar problems and can eventually break loose from epoxy.

I think ideally, you want something which is non-conductive, incompressible, and solid but soft. A solid material will not flow and potentially leak through the seal. A soft material will not fracture, and transmit stress to the components of the watch. In a hard material, fractures might also appear when thermally shocked (such as getting in and out of the water).

I'd suggest a good candidate would be a silicone gel. It can be applied to the watch in liquid form, allowing all air to vacate, then cure into a soft solid once sealed in the watch. It could also be removed relatively easily, if you decided you don't want it in there any more.

It's all digital from what I've seen. It seems like some clear epoxy would work well. Maybe some mineral oil after it cures, just to help fill little gaps (since epoxy tends to be pretty viscous).

EDIT: Although epoxy makes it a bit difficult to change the battery, depending on how you go about it. Maybe some conformal coating on the PCB + mineral oil.