I said to keep it under observation (3)
I believe the answer is:
eye
'i' is the definition.
(I've seen this in other clues)
'said to keep it under observation' is the wordplay.
I cannot really see how this works, but
'it' could be 'e' ('e' can mean 'electronic' which is similar to 'IT') and 'e' is located in the answer.
The remaining letters 'ye' is a valid word which might be clued in a way I don't understand.
This may be the basis of the clue (or it may be nonsense).
Can you help me to learn more?
(Other definitions for eye that I've seen before include "Dark spot on a potato" , "Four [NEEDLEFUL] may pass through this" , "Body organ" , "Organ of sight" , "'Please your... and plague your heart'" .)