bascially its about doing observation on key children in a way/layout that you choose e.g. tick chart, you choose activities that you wanna know if the child can do or what they cant do so you are then able to help them develop in that area e.g. a child of 2 years 7 months may be able to help when tidying up and they know what toys goes in each box so you can tick it, but then you can also cross it as they put all the toys in one box!
you then evaulate it by saying: I have noticed while doing this observation that....... and then also next steps- this is what you would do in order to help the child develop in that certain area of learning/development.

Hope this gives you abit of an idea.