Observability is crucial for CTOs managing complex systems due to its ability to provide end-to-end visibility. It involves monitoring all outputs from infrastructure to application level by collecting, storing, and analyzing data on metrics, traces, and logs. This enables quick identification and resolution of issues, optimization of performance, and ensuring system reliability. Observability allows CTOs to move from a reactive approach to problem-solving to a proactive one, detecting potential issues before they become critical. It also provides insights into system performance, helping in making informed decisions about scaling and optimization.