The following quote is from the National Conference of State Legislatures (NCSL).

In general, a poll watcher’s primary purpose is to ensure that their party has a fair chance of winning an election. Poll watchers closely monitor election administration and may keep track of voter turnout for their parties. They are not supposed to interfere in the electoral process apart from reporting issues to polling place authorities and party officials.

In most states, political parties, candidates and ballot issue committees can appoint poll watchers. In some states a candidate cannot appoint a poll watcher but a group of several candidates can appoint poll watchers jointly. Organizations and civic groups can also appoint poll watchers in some states. Most states don’t allow candidates to be poll watchers.

Poll watchers are usually required to be registered voters, but states differ on whether the poll watcher must be registered in the county or precinct rather than just in the state. States also differ on whether the cap on the number of poll watchers from one entity is based on the number of poll watchers per precinct or on the number of poll watchers per polling place.

State Laws on Authorized Poll Watchers & Voter Challenges

State-by-State Breakdown of Policies Governing Partisan and Nonpartisan Observers