To observe is to receive as many relevant info as accurately(including fake info detections by verifications) as possible. However, what can be observed by a battler?
(For the sake of writing battler AI, issues with fake info can be safely ignored as all relevant info can always be accurately received by any RMVXA battler AI.)
I think that any normal battler should be able to observe the opponents' current party/troop formations(like consisting of which actors/enemies), all their executed actions, and the allies' current statuses(like having which states/buffs/debuffs and how many hp/mp/tp).
Sometimes it could, however, be unfair for a battler to be able to observe the opponents' current capabilities(like classes, equips, parameters, extra parameters, special parameters, level and skill lists) or carried items.
For example, at the start of a battle, a boss facing a 6 actor party might be able to observe that all those actors are:
- heavily geared towards dealing damage with significant sacrifice from every other battle aspect, and/or
- mages only excelling at using magics, and/or
- fighters only excelling at using physical moves, and/or
- totally unresistant to some states/debuffs, and/or
- drastically faster than that boss(in action battle system, active time battle, charge turn battle, tactical battle system, etc), and/or something else.