There is a detailed video about Reviews and Observations which will tell you almost everything you will need to know about observations. Since it was made there have been a few enhancements which are detailed below.
The Staff label has now been changed to Observer.
It is now possible to have one of the care workers do the observation of other care workers ONLY in the scenario where it's a multi-carer event, and the observer does not have the "Planned observation" box ticked (to prevent them from observing themselves, of course).
In the following screen shot, we can see a multi-carer event for Catherine Earnshaw where Holly Golightly is being observed by Judy Kubrak, who is also an assigned care worker.
