Games covered on ESPN, ESPN2, or ESPNU in your area are not available on ESPN3 anymore (as of 8/27). WatchESPN will have them available
Access to ESPN3 is based on your ISP. Access to WatchESPN is based on your TV provider. If you don't have one of a few cable companies as your TV provider, you will not be able to watch content that is available in your area on ESPN, ESPN2, or ESPNU
http://espn.go.com/watchespn/faq?Read the FAQ's, it's all there, including the ISP's and TV providers that they have partnerships with that allow access
I think I may have gotten lucky. My plan was to ditch cable entirely in Feb, but I kept the basic package because internet only was $62/mo, and Internet plus basic cable was $40/mo. I get about 20 channels total, no ESPN channels. I didn't think WatchESPN would work for me since I don't get ESPN, but it did and still does. I think Comcast/Xfinity or ESPN may not have the authorization aspect of this down very well yet, only the authentication through the TV providers (it does reach out to Comcast and I have to login to authenticate)