Place garlic, chile, soy sauce, lime juice, honey, and oil in a mini food processor and process until smooth. Place beef in a small baking dish, pour the marinade over, and turn to coat. Cover and marinate in the refrigerator for 1 hour.
Preheat the grill to medium-high. Remove the beef from the marinade and season it with salt and pepper. Grill meat until charred and cooked to medium-rare doneness, about 10 to 12 minutes. Remove from grill and let rest 10 minutes before slicing into 1/4-inch thick slices.
In a small bowl, whisk together the shallot, chiles, mint, vinegar, sugar, and fish sauce. Set aside. In another bowl, toss the lettuce leaves and watercress together and then arrange the mixture on a platter.
Combine the papaya and carrots in a medium bowl. Evenly distribute the papaya mixture over the lettuce. Drizzle with a few tablespoons of the dressing. Arrange the steak on top and drizzle steak with some more dressing. Garnish with chopped peanuts and cilantro.
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