I have an issue type where upon creation, the issue is ASSIGNED and WATCHERS are added. However, only the ASSIGNEE is getting an email notification and the WATCHERS are not (though the WATCHERS are definitely being added to the issue.)
The Project uses the Default Notification Scheme and in the NOTIFICATIONS section for the PROJECT - it states that "All Watchers" get notified for all of the "Events" (Issue created, issue updated, etc.)