Observes egg in cuckoo nest (5)
I believe the answer is:
notes
'observes' is the definition.
('note' can be a synonym of 'observe')
'egg in cuckoo nest' is the wordplay.
'egg' becomes 'o' (I've seen this in other clues).
'in' is an insertion indicator.
'cuckoo' indicates an anagram (I've seen this in other clues).
'nest' with letters rearranged gives 'ntes'.
'o' inserted into 'ntes' is 'NOTES'.
(Other definitions for notes that I've seen before include "Observes; short comments" , "eg E F G (mus.)" , "Recorded summaries" , "Stone with jottings" , "registers?" .)