An observation is what can be directly seen or read from the source material (original text).
For example:
The man stormed into the store and shouted at the clerk.
A conclusion is the inference made based on the observation made.
For example:
The man must be angry at the clerk.
The man is angry.
The man is a bad-tempered person.
There are many possible conclusions that can be made. Some are more likely than others, and some are completely illogical. For example, an illogical conclusion based on the above observation would be "The man should not be allowed to keep a pet." While it is possible to eventually link this conclusion to the observation, it takes too many steps.
E.g. The man shouted at the clerk --> He has a bad temper. --> People with bad tempers often abuse animals. --> He should not be allowed to keep a pet.
