An observation is a note or message that you send to the other side. This message will be combined with a task or action you would like them to carry out. This prompts the other side to read/complete/upload a document or request a search. This allows both sides to speed up the transaction process by ensuring each side has done what they need to do when they need to do it.
ESPC Legal has a widget that allows users to manager observations, that users a traffic light system.