Leicester raced into a two-goal lead inside 23 minutes on Saturday, Vardy converting a penalty he won himself from Ben Foster before Maddison scored a stunning goal to cap a classic counter-attack.
Watford struggled as an attacking force – failing to register a single shot on target – and Demarai Gray hit the post for Leicester in the closest either side came to a goal after the break, the day getting worse for the visitors when Etienne Capoue was sent off in the last minute.
Leicester move above their opponents as a result of a victory that meant they have now won all five of their Premier League home matches against Watford, conceding just once in the process.
The opener came after Ben Chilwell's throughball released Vardy, who was brought down as he tried to round Foster, referee Graham Scott pointing to the spot despite the goalkeeper's protests.
Vardy sent Foster the wrong way, and then helped Marc Albrighton to set up his side's second 11 minutes later.
A trademark Leicester counter-attack ended when Albrighton's cross was superbly controlled by Maddison in mid-air, the attacking midfielder then flicking the ball over defender Adrian Mariappa and firing in a tremendous volley from just inside the area.
Isaac Success, in as one of two changes, failed to mark his new Watford contract with a goal, firing over when it looked easier to score, while Roberto Pereyra shot just wide after the break.
Demarai Gray crashed an effort against the post for Leicester, while two squandered chances from Andre Gray were the only late openings of note at the other end before Capoue saw red for a two-footed challenge on substitute Kelechi Iheanacho, who Watford felt was the one who should have been penalised.
What does it mean? Two teams trending in opposite directions
Leicester's win moves them just one point above Watford in the table, but the two teams are trending in very different directions.
The hosts are unbeaten in five league games, their best run for a year, while Watford have only collected one point from four games – not a sequence that will please Javi Gracia, who signed a new long-term contract earlier this week.
Leicester always a threat with Vardy and Maddison
Vardy scored as a substitute against Brighton last week, and marked his return to the Premier League starting line-up with an excellent all-round display leading the line here.
Maddison, meanwhile, got his season back on track in style – scoring for the first time since September 22 in a game he was fortunate to play in having been sent off against Brighton and serving his suspension in a rearranged EFL Cup tie with Southampton.
Foster foul gives Watford mountain to climb
Vardy may have been clever winning his penalty, but Foster's complaints over the decision were not warranted. The veteran keeper conceded from Leicester's only two shots on target, and his 12th-minute faux pas bringing down the striker was the last thing Watford needed when goals are proving so hard to come by in recent weeks.
Key Opta Facts:
- Leicester City have won all five of their home Premier League matches against Watford, scoring 10 goals and conceding just once.
- Watford have won just one of their last 12 away matches at the King Power Stadium against Leicester in all competitions (D2 L9), a 2-1 victory in April 2013 in the Championship.
- Since the start of the 2014-15 season, Jamie Vardy has won more penalties in the Premier League than any other player (14).
- All three of Vardy’s Premier League goals against Watford have arrived at the King Power Stadium.
- James Maddison has been directly involved in four goals in his six Premier League home games for Leicester this season, scoring three and assisting one.
- Watford’s Etienne Capoue was sent off in a league game in Europe’s top five divisions for the first time since May 2013 for Toulouse versus Sochaux.
14 - Since the start of the 2014-15 season, Jamie Vardy has won more penalties in the Premier League than any other player (14). Habit.— OptaJoe (@OptaJoe) December 1, 2018
Leicester have an emotional match away to their former title-winning manager Claudio Ranieri and Fulham on Wednesday, a day after Watford host champions Manchester City – hardly an ideal fixture as they look to reverse their recent slump.