I recently finished All the President's Men. It was an interesting read, but I feel that I am missing a lot of the context surrounding the scandal. What exactly made it so serious? What were other factors, politically, socially, economically, diplomatically, that were occurring that influenced how Watergate was viewed?
I haven't read the book so maybe there are details missing from the book that everyone just assumed were common knowledge about the events.
There are a few reasons why Watergate represented exceptionally despicable behavior on the part of president Nixon and his accomplices.
Subversion of the democratic process. Making use of dirty tricks (such as eavesdropping on political opponents in their private offices) to influence elections rather than to allow the normal democratic process to work on its own.
Use of government powers for personal and political gain. The use of the IRS, FBI, and CIA to attack political and personal enemies.
Violations of election laws, operation of election campaigns in a manner similar to organized crime. "Slush funds" from election contributions were maintained for purposes of financing black bag operations against political enemies and paying off folks who held information that could damage the administration.
Subversion of the rule of law. Even more so during the cover up as those involved in the scandal committed perjury and obstruction of justice.
Abuse of presidential authority in the cover up. Nixon tried to forestall an investigation of his administration by the justice department by directing the attorney general to fire the prosecutor. Instead the attorney general resigned, as did the deputy AG. Only Robert Bork, who was then next in line as Solicitor General, followed through on the President's order and fired the prosecutor. This behavior is precisely why modern special prosecutors are controlled by congress and not the executive branch.
Ultimately the break-in at the Watergate hotel was overall fairly inconsequential in the grand scheme of things. Nixon was nearly certain to win the '72 election regardless. However, the discovery of the break-in by law enforcement revealed the existence of a vast conspiracy of individuals, some within the government, headed by Nixon which had been violating the law and subverting the most fundamental principles our country was founded on for years.
The purpose of executive branch institutions such as the FBI, IRS, CIA, etc. is to carry out the law and facilitate the operation of government as a means of providing services to the citizens of the country. Nixon abused these institutions as a dictator would and used them to attack his personal and political enemies. He used the institutions of government to further his own power and to advantage himself and his cohorts.
Nixon put himself and his personal lackeys above and outside the law for the purposes of maintaining and enhancing his own power. It's a very short step from there towards transitioning to a dictatorship where those in control of the regime are entirely above the law, it's happened many times even just during the 20th century, the fact that it came so close during Nixon's administration was a wakeup call to the country on the fragility of democracy and rule of law even in America.