The Oxford - Cambridge arc doesn't really exist yet, not in rail terms. And the journey planner would show Watford as a potential option if it had the calls, and was included in a "LON" type code (per the airports) against key WCML destinations.
I agree on a bit of "drop me at Watford mum" - my dad did that for me often as it was far easier than heading to Euston. I went to uni in Manchester and stayed on for a while.
Watford has northbound demand also. And a lot of big employers in Watford itself, so there is plenty of inbound, from both northwards and from London/counter commuting, including the Southern service and the options that creates. It's not as simple as a dormitory pattern (e.g. Leighton Buzzard or Harpenden), it is much more nuanced.
And MKC has a massive amount of London and London/counter commuting too. I would think not too different.
You'd be surprised how many people railhead by car (via good, relatively uncongested roads) to Milton Keynes from the likes of Aylesbury, Luton, Bedford etc, for a fast link north.