The resurgent centre-back is rediscovering the kind of form which propelled him into the limelight earlier in his career, culminating in a big-money move between local rivals West Brom and Aston Villa in 2008.
Not only are his performances solid and assured at the heart of defence but Davies has now chipped in with a handful of goals this term, with four headers coming in City's last seven games.
Davies' 35th-minute opener was a welcome arrival for a Blues side who had started slow out of the blocks, although the hosts never looked back from then onwards and his second on the hour mark confirmed a third defeat in four games for Watford, with Chris Burke firing in a late third.
Birmingham, unbeaten in eight in all competitions and having now won four on the spin, show no sign of easing up despite this being their 37th game of the season, while their unbeaten league record at St Andrew's remains intact.
Chris Hughton restored five of his first team having made six changes for Wednesday's 1-0 FA Cup success at Wolves.
Hornets counterpart Sean Dyche welcomed back midfielder Jonathan Hogg after a minor knee injury and it was he who saw his side start with plenty of buzz.
Eight-goal top scorer Marvin Sordell was proving a particular threat although he should have done better when he beat the offside trap after nine minutes, with the frontman forced wide by Boaz Myhill before seeing his pull-back cleared away from danger.
A surging run from winger Burke sparked a slight upturn in momentum by the home side but they remained largely scrappy, giving the ball away on too many occasions.
Mark Yeates and John Eustace fired wide from distance for the visitors, who continued to prove the more accomplished over the opening quarter.
But, despite looking ordinary, it was Birmingham who took the lead after 35 minutes.
Burke found Keith Fahey on the corner on the penalty area and the Irishman lofted a cross to Davies, who headed home from 12 yards.
The goal put City comfortably in control for the remainder of the first half, although they were sent out of their stride within six second half minutes when they lost leading scorer Marlon King to injury.
Myhill parried a shot from Sordell before Burke saw an effort deflected narrowly wide for City.
And from the resulting corner, man of the match Davies leapt to meet Jordon Mutch's corner and power home a fine header.
The goal ended the game as a contest and Burke made it 3-0 in the 81st minute, converting from 12 yards after Scott Loach had parried from Mutch.
Coming after last weekend's 6-0 triumph at Millwall and the midweek success away to Wolves, it confirmed a successful eight days for Hughton's side.
Watford, meanwhile, now winless in seven meetings with Blues, are again looking over their shoulders at the bottom three.