Direct observations are made on subjects by recording the behaviours they exhibit in their natural setting. The researcher can either be physically present to record these observations using a camera or can hide to avoid any interference in the data gathering process. Example, watching or recording a bird chirp.
Indirect observation involves recording the traces left by the subject to understand the reason behind the behaviours exhibited by a subject. Example, observing the distribution of bird droppings to figure out their movement.
Thus, a direct observation will help identify the behaviours in a population and an indirect observation will establish the reason behind the observed behaviours in the population.