Older children (7 yrs +)who are being observed may want to prepare for the obsevation/ exam/ test. by informing them beforehand you allow them the time needed to asked and have answered any questions, what subject are being covered, why are we doing this? prepare (revise) for the exam, which allows them to perform to the best of their ability. Informing these children will alter the outcome of the obsevation but in a positive way.
If you had the same discussion with younger children the results of the obervation may be influenced in a negitive way, the child may perform differently if they know they are being observered, equally as a child gains understanding it is possible to ask them 'do you mind i watch you' without the child acting in a stimulated fashion.
Does that make sense my head is
kerri