In a microservices based architecture, we have multiple services communicating with each-other. Observability tools give the developers the power to observe how these services are actually interacting.
Observability uses instrumentation to provide insights that aids monitoring. In other words, monitoring is what you do after a system is observable.
An observable system helps understand and measure the internals of a system, so that one can easily track development bugs and issues in a complex microservice architecture. In short, the importance of observability especially tracing, which is one of its most important pillar cannot be understated.