It states that two things that are placed together can produce fear dut to the conditions and the manipulation of the environment. Watson conditioned Albert a child who was initially not scared of rats but when there was a loud noise caused by Watson banging a steel bar with a hammer behind Alberts' ear caused Albert to be afraid and cry, so the classical conditioning basically explains that certain situations and the environment can create or produce fear to someone.
This is true. Watson classically conditioned Little Albert to be afraid and cry when he saw a white rat. However, Watson expanded on this research with Little Albert. He demonstrated the phenomena of stimulus generalization. Little Albert started to develop fear to other stimuli which shared some properties with the white rat. More specifically, objects which were white and soft. The list includes a Santa Clause mask and John B. Watson's own beard!