Despite guiding the Hornets to their highest-placed finish in four years, on a limited budget, the incoming Italian owners decided Dyche was not the man they wanted, and parted company.
However, Dyche returns to Vicarage Road on Saturday with his Burnley side, knowing victory will see his current club take a significant step towards promotion to the Premier League.
"I didn't want it to not work out right there, it's just the nature of the job," Dyche told the Lancashire Telegraph.
"When I came out of Watford I wasn't throwing my dummy out.
"It was a business change, that's all it is and I had to be realistic about it. It's just part of the job.
"I have fond memories. I had a good time there.
"I was player, captain, youth coach, reserve team/development coach, assistant manager and manager so of course I had a real connection with the club."