In a blender, food processor, or juicer, puree the watermelon chunks. Pass through strainer to remove seeds and pulp.
In a small saucepan set over medium heat, combine the sugar, lime juice, and lime zest. Heat until sugar is melted and mixture is smooth, stirring occasionally. Pass through strainer to remove zest.
In a large bowl or pitcher, combine the watermelon juice, lime syrup, and water. Chill completely.
Pour chilled mixture into a 9x13-inch (or similar sized) dish. Place in the freezer. Every 15-20 minutes, remove from the freezer and use a fork to scrape and stir frozen pieces from around the edges into the rest of the mixture (each time the mixture will be more and more uniformly frozen). The whole process should take about 1 ½ hours.
Cover granita tightly and store in the freezer for a few days. If hoping to store longer, transfer to an airtight container to prevent freezer burn.