How do you "watch" people?

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How does one "watch" people? I'm in somewhat despair because my brain can't process most of what is going on outside of me. How can I process the information better?

This is a very hard thing to explain.

To me, I see it as slowly building a vast database of social cause and effect. Observing what's happening, and then how people react. What responses people give to others words and actions. And just building that data until you have enough observations to start forming some conclusions on what's best to do or say at certain times.

Best I could do. It's a hard concept to verbalize.