The line "Madness in great ones must not unwatched go" is taken from Shakespeare's "The Tragedy of Hamlet, Prince of Denmark," often shortened to just "Hamlet." Specifically, the line is from the first scene in the third act and is spoken by King Claudius.
Translated into modern English, the quote taken from Hamlet roughly means when powerful people, specifically Hamlet, start to show signs of insanity, they must be closely watched. At this point, the antagonist Claudius is very concerned with keeping the power he obtained by murdering Hamlet's father, the former king. These concerns meld with the concerns he voiced about Hamlet going insane, leading to him becoming more preoccupied with keeping power than before.