Previously, email notification was a (dreadful) hack because it wasn't supported in XenForo. The XenForo 1.2 release (a couple of weeks ago) added this capability -- but it was incompatible with the old email notification, so that has been removed.
You will have to resubscribe to the forums you want to watch.
WAD - you will only be notified once if there are multiple new messages that you have not read in a watched thread. When you read them, you'll get another notification if any new messages are posted. (This is the same way that notifications worked previously.)
In the past all posts were sent out as notification emails, so my mail client would notify me of each on arrival. and needed to "browse" a\only my own posts. If I did not post for a week, I could keep my browser off and still get all the news. No more - I have to search for them, and I can no longer search for messages without fresh internet access. More expensive but less convenient - not an enhancement...