Observing children while they are reading provides you with valuable information for making teaching decisions. For example if a child reads word-by-word, you know you need to teach the child how to read in meaningful phrases. Another child may be sounding out each letter in such a way that is slowing down his/her reading. By observing this behavior, you know you need to teach that child how to chunk.
The Reading Behavior Observation form provides a way for you to record what you are noticing a child is doing when he/she is reading and what the teaching implications are.
In my school we all use this form while assessing. We fill it out at the same time we are taking a running record. While we use the accuracy and comprehension score to determine if a child has passed a running record, it is the observations that really help us to determine what teaching will happen next for that child.