The Observance setting of recurrence rules is specified at the top-right of the Type panel of the recurrence rules tab control.
This setting allows you to specify that a holidays is not a general holiday that applies to everyone in the entire country. The various types of observance are grouped in 3 main categories: geographical (municipal, regional, ...), sectorial (public sector, banks, private sector), religious, or time of the day (morning, afternoon, evening).
The observance of a holiday is not used in basic holiday tokens, but its value can be obtained from the function GetHolObservanceFromTable in macros to ignore or shade or otherwise treat specially partial holidays (ie. holidays whose observance is not blank).
See also: Holidays Recurrence Rules.