It's quite obvious if you look at how a watermill is built. Upstream, there's a wier which diverts water along a culvert into a pond at the level of the weir. The watermill is then driven by water falling from the pond to the level of the river at that point. Depending on the gradient of the river, this can be some distance from the weir. If the weir diverts on average a substantial portion of the flow, anyone wanting to use the river between the weir and the mill will find there's much less water for the purpose. Many British rivers in areas where there were (literal) cottage industries like little mesters are not that big (only a few metres across and under a metre deep) so you can see where conflicts could arise. And also they do dry up to almost trickles in dry weather.