Observability, as discussed in the text, is a critical practice within DevOps that involves creating comprehensive insights into an environment by intersecting various data points, such as monitoring, logging, tracing, analytics, and alerting. The main objective is to achieve a deep understanding of system health and identify real issues to improve operational environments. Common pitfalls include monitoring and alerting everything, which can lead to data overload and alert fatigue, thus hindering true observability. Effective observability requires careful selection of what to monitor and log, ensuring alerts are actionable, and utilizing analytics to cross-examine data for trends and abnormalities. It also emphasizes the need for collaboration between development and operations teams to ensure meaningful data is generated and utilized. Real-world scenarios, such as those involving MongoDB performance monitoring and latency heatmaps, illustrate the application of observability practices to proactively address potential bottlenecks and optimize system performance.