The 31-year-old returned to Sydney late Tuesday from the tour of India after he was dropped for failing to prepare feedback on how the team could improve and deliver it to management. Three other players received the same punishment.
There have been persistent rumblings that Watson and Clarke do not see eye to eye, but the all-rounder said it was nonsense.
"I've been playing cricket against and with Michael Clarke since I was 12, so we've got a lot of history as people," he said.
"Obviously we are quite different people in certain ways and we're very similar in a lot of ways as well.
"Like you do in every relationship, it goes up and down and things are going really well at the moment with me and Michael."
Cricket Australia general manager Pat Howard has made it clear Watson must start toeing the team line if he is to continue playing Test cricket and implied he was not always a team player.
But Watson denied this and said Howard, who comes from a rugby background, did not know him well enough to make such allegations.
Howard, a former Wallaby, has only been involved in cricket for 18 months.
"Just go round and ask every person that I've played cricket with and that will give you the best indication of whether I'm a team man or not," Watson said.
In announcing that Watson, James Pattinson, Usman Khawaja and Mitchell Johnson had been suspended, Clarke said the decision was the culmination of a general slide in attitudes on the Indian tour.
Australia, who face an Ashes double header against England starting in July, trail 2-0 in the four-Test series in India.
Watson felt the punishment was overly harsh but acknowledged he was wrong in not completing the review required from all the players.
"I obviously accept that I did the wrong thing with what I did, but I will always find it very hard to accept being suspended from a Test match for my country," Watson said.
"I've missed a lot of Test matches and games through injury throughout my career and I also feel like I've worked my absolute bum off as well to have an opportunity to be able to represent my country."
Watson added that while he was disappointed to miss out on the third Test, he was happy to be home with his pregnant wife.
"This has obviously happened in my life for a reason, so that I can come home," he said.
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