Observability is the ability to understand how your system behaves at any given moment by collecting various data points pertaining to your system's behavior from multiple sources. It's used for complex systems like distributed systems or microservices architecture, and involves measuring output, collecting metrics, logs, and traces, and analyzing them to deduce internal state or behavior. Monitoring is the process of periodically observing your system and collecting and analyzing certain data points that indicate how the system is functioning, such as CPU usage, memory usage, network traffic, and error rates. Observability focuses on the whole system's scope, current state, proactivity, and granularity, while monitoring has a limited scope to performance indicators, reactive approach, and less granular data. The relationship between observability and monitoring involves using each to detect different types of issues, with observability detecting present problems and monitoring identifying historical bottlenecks. Striking the right balance between both is essential for achieving different goals, such as understanding real-time behavior or diagnosing issues via metrics and alerts.