My poor attempt at an explanation:
Annotations are ‘official’, consistent, and have been deemed common enough to be implemented across the taxonomic level for which they apply.
Observation fields are something that anyone can make and thus there are a multitude of options based on the requirements of the person making or using the field.
Alive/Dead/, Male/Female/, and Life Stage are things that apply to most every Animal and thus you’ll see those as annotations for the relevant taxonomic level. Recording information like ‘Predating on X’, ‘Infected By X’, ‘Spider: Missing Legs #’, or ‘Orthoptera Color Variant: X’ are less likely to be applicable to (most) every observation and are thus kept as observation fields.
The fact that anyone can create an observation field makes them very useful for people who want to record specific information, though a drawback to that is there are some fields that cover similar ground.