Consider taking a direct dependency on watchdog

We should consider taking a dependency on [watchdog](https://github.com/gorakhargosh/watchdog) for our autoreload functionality in local mode. Maintaining our own version has been problematic, is hard to follow, and I believe still leaks processes in our integration tests.

Start by locating the existing autoreload implementation used in local mode and the integration tests that expose process leaks. Compare that implementation with watchdog and determine whether a direct dependency can replace it; done means the dependency choice is resolved and the relevant autoreload behavior and process cleanup are covered.

Written by the indexing model from the issue text.