Observe to the letter, by the sound of it (3)
I believe the answer is:
eye
'observe' is the definition.
(eye can mean to observe or see)
'the letter by the sound of it' is the wordplay.
'the letter' becomes 'i'.
'by the sound of it' shows a homophone (sound like).
'i' sounds like 'EYE'.
'to' acts as a link.
(Other definitions for eye that I've seen before include "'Please your... and plague your heart'" , "central spot" , "It accommodates a pupil" , "Needle or lace hole" , "One looks" .)