。
She watched the children swimming in the pond.
Literal
She [topic-は] children [subject-が] pond [at-で] swim [nominalizer-の] [object-を] watched.
A textbook example of the perception construction ~のを見る ('see/watch X happening'). The embedded clause 子供たちが池で泳ぐ describes the action being witnessed; の nominalizes that clause; を marks it as the object of 見る. Note how the embedded clause's subject takes が rather than は — a subordinate clause shifts the topic-marker dynamic. The で marks the location of the swimming.