How can Watson handle the puns and wordplay that occur in Jeopardy?
By reading many, many texts Watson learns how language is used. That means it learns the context and associations of words, which allows it to deal with some of the wordplay we find in Jeopardy!. But what is special about Watson is that it is able to also produce a confidence in its answer. If that confidence is low, it realizes: maybe it doesn’t understand the question–maybe there is a pun or something it’s not getting. On the other hand, if the confidence is high, it knows it likely understood the question and stands a good chance of getting that question right.
