Watson sees the figure of Sherlock Holmes on the tor, but does not know it is him because he thinks Holmes is in London.

Sherlock Holmes’s loyal friend and assistant Watson has been staying at the Baskerville House to collect information on the mysterious Hound of the Baskervilles that is supposed to be haunting the moor.  One day Watson is walking with the baronet when he sees a “lonely man upon the tor.”  He knows it is not the convict, but does not recognize the man.

As far as I could judge, the figure was that of a tall, thin man. He stood with his legs a little separated, his arms folded, his head bowed, as if he were brooding over that enormous wilderness of peat and granite which lay before him. (ch 9)

Watson does not find out until he investigates further that the man is actually Sherlock Holmes.  Watson is angry because Holmes did not trust him to tell him he was actually hiding out on the moor instead of being in London like he was supposed to be.

Although Holmes trusts Watson, he still needs to explore different avenues on his own.  He sees no reason for Watson to be upset that he did not let him in on the secret, because he is just pursuing the investigation.