you are allowed on FL rules a maximum of 5 loans in your match day squad from teams in your country.
Watford currently have 7 players on loan from Undinese. 2 fron Granada, 1 from standard Leige and 1 from Chelsea.
Therefore under the rules they can field all these players in their match day...
completey agree with Holloway - think watford are a dreadful club they way the sacked dyche when he massively over achieved last season was a scandal - now they are in my opinion cheating - i wish them nothing but failure.