"A gun barrel, some mortar bombs and a ramp-type sight make an effective anti-aircraft and anti-ground turret"
The Tower, like the Mortar, excels at mowing down groups of Troops. However, unlike the Mortar, it puts out a decent amount of DPS (damage per second), and will also target Air Troops in addition to Ground Troops. Also unlike the Mortar, the Watch Tower has no blind spot.
Although the arcane blasts from the Watch Tower do less damage per shot than Mortar, it makes up for this by having a much higher rate of fire than the Mortar. This makes the Watch Tower an excellent choice for defending other structures by blasting troops that get too close. The Watch Tower's only real weakness is its range, which is among the lowest of all defensive structures.
Towers and Mortars are very complementary; as they both have specific weaknesses that the other unit can address.
Taking out Watch Towers can be tricky despite their relatively short range. It is often a better tactic to avoid them entirely by attacking another part of the village that isn't covered by them. To quickly destroy a Wizard Tower, deploy a few Brutes as a distraction while Musketeers or Sea Wolfs take out the tower. Deploy Troops in a circle around it since this will limit its ability to take out multiple troops with splash damage. Dropping 1 Brute and 5 Musketeers nearly always works (assuming they are of comparable level to the Watch Tower).
An excellent defensive strategy for the Watch Tower is to put it near your Town Hall because of the Watch Tower's splash damage and relatively high rate of fire. However, due to its limited range it is sometimes more desirable to put the Watch Tower near the outside of your village.
Another good strategy is to put it near your Mortars, as both cover each other's weaknesses and can decide the outcome of a raid (see Watch Tower-Mortar combination example below).
Example of a Watch Tower-Mortar combination: The Mortar can cover a very large range so attacking units will have reduced health by the time they come into shorter range of the Watch Tower, which helps finish them off. In exchange, the Watch Tower defends the Mortar by destroying units that cannot be attacked by the Mortar (all air units and ground units inside the Mortar's minimum range).
For attacking, use some units to distract it (Brutes, or Grunts if necessary) and destroy it with Musketeers or another ranged troop. Melee troops like Grunts or Brutes can destroy a Watch Tower by themselves if there are enough of them, but because these troops must attack while physically touching the tower (and are therefore grouped up), the Watch Tower can attack the entire group simultaneously.
When deploying units, be careful to ensure that they won't get into a clump as they come into range of the Watch Tower (for instance attacking a Bank near a Watch Tower), because the Watch Tower will destroy the group very quickly.