Benitez says it is difficult to explain what happened against the Hornets at the Goodison Park.
The Toffees were in the ascendancy but a second half capitulation handed Claudio Ranieri his first win as Watford head coach.
Tom Davies had given Everton the lead in the opening three minutes but former Toffee Josh King pulled parity for the visitors ten minutes later.
Richarlison restored the lead midway through the second half but a turn of events saw Watford hit four goals through Juraj Kucka, Emmanuel Bonaventure and King’s brace in the dying embers to win the game.
"I think it is difficult to explain when you are winning 2-1 and concede four goals in a few minutes. We need to understand how to manage the game, especially managing when you are winning,” Benitez told the media after the game.
"We conceded four goals in a few minutes and normally you cannot do this in the Premier League.
"When you score the second goal that is when you have to be better compact and organized but we made mistake after mistake. Difficult to explain.
"We have to be better, especially when you are in control of the game."
Everton will look to atone for their sins next week when the travel to the Molineux Stadium to face Wolverhampton Wanderers.
