Watermelon is sweet, which offsets some of the salt and vinegar flavors in hot sauce, and the juicy and mild taste of watermelon helps balance out the fiery heat.
When you eat spicy food, a molecule called capsaicin triggers a reaction that causes your body to think that your mouth is physically hot, even though it's just a sensation.
To get rid of this spicy sensation, it helps to eat something cool and refreshing. Watermelon contains 92% water, which can help cool your body and mouth.
While the water may move the capsaicin molecules around in your mouth and spread the burning sensation, the coolness of the liquid offers some temporary relief.