https://steamcommunity.com/discussions/forum/0/5077247524968698674/

The game "The Watchmaker" was removed from libraries of owners on Steam, no refund was given.

I would like to warn you that 1C and Micropsia Games now scam customers. If you have any games by them on GOG, make sure to download the installers for offline usage.

From my understanding Steam is allowed to do this where as Gog isn't supposed to as far as I am aware

Any of them is allowed to. GOG adds the ability to back up installers though so they can't take your game from you if you did back it up.

I sent an e-mail to the publishers (1C and Micopsia).
I hope this was an accident and not knowingly and willingly removal of the full version.

Can a mod please change the thread title to something more neutral like "1C and Micropsia replaced "The Watchmaker" on Steam with demo version"?

It’s not a scam though. Rentwares have always been that, rented. The point of drm free (and online gated, online only, etc. free) is that you have the files and thus control over it. If you buy not a service like steam then you are simply renting it, if steam shuts down you lose.
In this example particularly it’s probably an error, but it is really a good idea why not to use those stores.

You are missing the piont Steam reserves the right to remove games from someone's library for any and all reason Steam deems to do.. where as GOG last I checked and to my knowedkle is not the case on removing things as only a select few reasons allow it to be done..

Source for current publisher (not 1C):
https://store.steampowered.com/app/504430/The_Watchmaker/

Most probably 1C is no longer involved (see attached) and we can guess that something might have happened between the ex-publisher and the developer. Whatever the reason the game might resurface soon after they, the developers, get their full rights (or maybe only publishing rights) on The Watchmaker IP to start making money again, this process might require returning all forms of investment back to 1C with fees.
(everything here is pure speculation created for the sake of self-entertaining)

Game is appearantly back in store.
I guess it was a technical issue, wouldn't even made sense as a "scam" to remove a game and replace it with a demo.

Therefore please bow down your beloved pitchforks and torches.