The disappearing part (for both the progress bar and the button) was part of the design. The loading bar disappears when it's done, and the button disappears as well. The button disappears because with the original form-submission reset behavior, new watchlist items would also show up when the watchlist was reset. However, the new JS reset does not load new items. Therefore, clicking the button after the initial click would in theory mark new watchlist changes as visited, but would not display said changes or show any visual change or indication, which could be confusing. (see https://gerrit.wikimedia.org/r/#/c/326242/)

The button graying out/disabling is strange and I'm not sure if it has to do with this new enhancement. It doesn't seem to happen on my end. (Fedora 25, Chrome 55)

Check to make sure that pages are marked as visited, the change had made it so that the page marks stuff as visited without reloading (possibly).
No idea why they made it remove the button though.

Also, I suggested a script here, which replicates the functionality without using a confirmation button.

Is this fixed? I've now got a watchlist with some unread items in but the "Mark all pages as visited" button is greyed out - purging on it's own doesn't seem to fix it, but if I close and reopen the tab and then do a purge it seems to clear it... [Windows 10, Firefox 51.0b7]

It's not deployed yet.

Mentioned in SAL (#wikimedia-operations) [2016-12-16T16:35:36Z] <legoktm@tin> Synchronized php-1.29.0-wmf.6/resources/src/mediawiki.special/mediawiki.special.watchlist.js: Revert confirmation button and apply other fixes - T153389 T153438 (duration: 00m 39s)

Mentioned in SAL (#wikimedia-operations) [2016-12-16T16:36:34Z] <legoktm@tin> Synchronized php-1.29.0-wmf.6/resources/Resources.php: Revert confirmation button and apply other fixes - T153389 T153438 (duration: 00m 39s)