affair vs observance

affair and observance both are nouns.

Word	Noun	Adjective	Verb	Adverb
affair	Yes	No	No	No
observance	Yes	No	No	No

As nouns, observance is a hyponym of affair; that is, observance is a word with a more specific, narrower meaning than affair:

affair (noun)	observance (noun)
a vaguely specified concern	the act of observing; taking a patient look
a formal or official social gathering or ceremony of people	conformity with law or custom or practice etc.
a usually secretive or illicit sexual relationship	the act of noticing or paying attention
	a formal event performed on a special occasion