Path-following is a fundamental motion control problem for AUVs. Despite a number of nonlinear control techniques having offered new tools and promising solutions to deal with the path-following problem of AUVs subject to model uncertainties and actuator saturation, they typically nonetheless yield relatively complicated controllers which may be prohibitive in the real world. Motivated by that, this paper aims to develop an alternative anti-windup control scheme, which should be capable of achieving satisfactory control performance, as well as be easy-to-implement in practical cases. To this end, it suggests a new approach using the theory of singular perturbation and time scales. In this paper, we first make good use of the difference between the bandwidths for observer and vehicle dynamics to design and analyze the DO, so as to provides a new physical perspective. We then show how such three-time scale singular perturbation control law can be designed. This can provide a deep insight into the dynamic response of closed-loop system in a geometric view. Following that, we propose a novel anti-windup modification, based on the physical perspective and the “geometric view” mentioned above. Simulation results and experiment results suggest that this approach is feasible. Although our motivating application is to the path-following of AUVs in the horizontal plane, the proposed control method is applicable to a variety of problems in control community, in which the time-scale separation widely exists. In future research, we will extend the proposed method to three-dimensional (3D) path-following, as well as apply the singular perturbation technique to reduce the computation complexity of MPC and Neural Network control. Additionally, as the PI/PID controllers usually suffer from the difficulties of selecting proper control gains, it is also expected that the singular perturbation theory can be employed for solving this problem, by taking advantages of the physical perspective.