Observation is the cornerstone of mindful practice, because (believe it or not) it's possible to live life without noticing what you're doing in great detail.
We build good, bad, and neutral habits, and much of this can happen unconsciously. With the decision to observe life as it happens in the moment, it's possible to make choices that are more aligned with goals and the meaning we want to find in life.
As we observe mental, emotional, and physical choices, our awareness of self becomes more integrated and complex. In other words, we have more access to real wisdom.