Exactly - the LSP portion of pyre works for files you have open in an editor, but might miss changes due to a rebase or files you edit on the terminal. The watchman integration is there to make sure that pyre's aware of changes outside your editor.
Edit: pyre will show type errors for all files in your repository, not just the ones you have open.
Ah, that's nice. So you can change the type of a function in one file that you are editing, and pyre will show you all the other places that are now using the wrong types.
Edit: pyre will show type errors for all files in your repository, not just the ones you have open.