I’ve used it for well over 2 years and just realized this myself. And I still don’t know what the “observation” actually includes. Only that it appears to exclude photos–but based only on the fact that there’s a separate license for photos and observations. So I guess an observation is anything other than media.
I know that we can post observations without media (photos, sound, etc). But I can also post observations without date, time, or location. So, at minimum, an observation is “I saw something”.