Unless you explicitly reload the watchdog timer (i.e. copy the value from WDTD SFR to the timer itself by writing one to WDT SFR bit), the timer starts from its default (= 0) and times out after (255-0)*344064/f_XTAL which is at X=12MHz around 7.3s - which perfectly matches your observation.

JW

PS. just a sidenote: the watchdog is used also for timing the ISP entry, which is then contrary to what the datasheet says, dependent on the value of crystal. The reload value used by bootloader is FBh, so the delay is around 100 ms at 12MHz rather than the declared 400ms...