Systems are observed through the signals which directly or indirectly provide information about the states of the system. A meteorologist makes deductions from the state data of temperature, atmospheric pressure, wind velocity and humidity, while doctors do so from the state data of systolic and diastolic blood pressure.
Signals give us information about changes in the system, we can get information about system dynamics. This is discussed in the chapter on changes and stationarity.
Observations can be made continuously or by sampling, in specific intervals and according to the process stages.