Then I see games that are property of neither of the big names and they use a beholder looking creature and call it a Watcher, will they sue me if I use Watcher? Will they sue me if i use the likeness of a beholder and call it a Pupil-Monster?
Yes, no, maybe, who knows. The fact that someone uses something that (maybe only in your opinion) looks like a beholder and isn't sued does not mean a lot. First, you don't know whether they're paying a royality fee or whether they're maybe just at court (though in that case, WotC would very likely go for a cease-and-desist first, so you wouldn't be able to see the game online). Second, it might just be similar, but not similar enough. Calling your lawyer for every website you see and going into a thousand frivolous lawsuits every month costs time and money, so you don't do that below "some threshold".
What that threshold is, nobody knows. It's a mix of being just as much to get pissed enough to pick up the phone, the likelihood of winning (the more similar, the higher), and the estimated amount of money that the other guy (that is, you
There's the French saying Where there is nothing, the King loses his rights
, or the German counterpart You can't reach into a naked man's pocket
(I'm not sure if a similar idiom exists in English). Which means no more and no less than: Lawsuits cost time and money. If I'm going to sue you, I do that because I want your money (and of course for God and Justice). Therefore, the more you own, the more prominent this is, and the easier it is for me to get a hold on you, the more I'm likely to pick up the phone.
If you don't own anything that I can take from you, there must be a lot
of injustice happening before I'm willing to pay for the lawyer.
Now, let's say there's some unknown rubbish game that uses my IP. Website with 50 hits per week, domain registered with GoDaddy, author unheard of, little evidence as to where he lives, presumably in some far away eastern country with laws that I don't know about... oh fark's sake. Too much trouble for too little gain.
Then look at this other game. Hmm... US guy, sells on Steam, a couple of thousand downloads per week. Trivially identifiable, reachable, actionable. Easy money.
About beholders in particular, WotC considers them as part of their "product identity". This makes it likely that the "piss off" threshold is rather low.
So, while I'd consider anything that looks like a big floating eye only marginally dangerous, anything like a big floating eye with a mouth is probably no such a good idea. Anything like a big floating eye with a mouth, a yellow body, and several smaller eyestalks... that means asking for trouble.