An "observation" is not necessarily something you "see". It can be something you measure.
For example, ethanol is converted to acetaldehyde in the body. How did they determine this was occurring? First, you start with a model organism in a small space, like a bacteria. You add one substance and measure the other. Then what happened? They dissolved the bacteria, removed the cabohydrates and fats and then purified the proteins.
They took each of these purified proteins and added them to a series of vials.
They added ethanol to each one until they found one vial where where acetaldehyde appeared.
Then, they examine the protein, determine its structure. Now they know how it could interact with an ethanol molecule. They run experiments with the purified protein to measure its performance converting one molecule to the other. They block the enzyme with other molecules to affirm their hypothesis. Their observations confirm this biological molecule converts one chemical to another. This is a metabolic pathway.
Using the same isolation technique they purify the proteins from multiple tissue types, for example, the liver. They discover large amounts of alcohol dehydrogenase in the liver. They take isolated liver cells and subject them to ethanol. It converts to acetaldehyde. But then the acetaldehyde becomes acetic acid, through a different process, but they have localized this enzyme activity to a specific body part.
How the concepts in biochemistry were discovered are are best explained as a combination of approaches: cell biology, cell culture, organic and physical chemistry, microbiology, and molecular biology. The explanation above was just a plausible guess as to how you might determine what enzymes might exist in a cell or organism in a lab. The actual story of how any particular metabolic process was discovered is out there.