The idea of people-watching can seem weird, but for a writer it can help with character development. Observing how others interact or respond to different situations can give insight to potential personalities and how they vary in this widespread world. It can also serve as a compass in the sense of gauging how many individuals act or say things in a certain manner. Nothing is worse than to create or read something that is unrealistic or less than truthful. While these may be reasons that I support people-watching for writing, what are yours?
Melanie V. Logan 
My hobby? People watching definitely! because people are interesting and because I am deeply curious about what drives us all to say and do the things we do and because like you say, if I hope to be a better writer (perhaps even a better person) I have to ingest all the minutiae, all the little details of everyday exchanges for authentic writing, for clarity…
People watching can be interesting and eye-opening. Sometimes what we feel is weird or quirky about ourselves, we can see that many others do the same. Makes you wonder what else is in common.