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.
Edit: pyre will show type errors for all files in your repository, not just the ones you have open.