Cloud of smoke, perhaps, under medical observation (7)
I believe the answer is:
'cloud' is the definition.
(I know that cloud can be written as obscure)
'of smoke perhaps under medical observation' is the wordplay.
'of' becomes 'o''.
'smoke perhaps' becomes 'cure' (I've seen this in another clue).
'under' says to put letters next to each other (below, in a down clue).
'medical observation' becomes 'bs' (I can't explain this - if you can you should give a lot more credence to this answer).
'cure' after 'bs' is 'bscure'.
Can you help me to learn more?
(Other definitions for obscure that I've seen before include "Hazy or indistinct" , "Uncertain; indistinct" , "Not clearly expressed" , "Arcane" , "Unheard-of" .)