Onlooker play is a very observant type of play for children. It begins around the age of 3 and is where children learn from watching other children play. They are engaged mostly in the observation of how other kids play.
This is an important beginning stage for learning how to play with other children. However it is not limited to just observing children play, children also are learning how to play by watching adults play.
One way to help encourage this type of play is to take your child to a park where other kids are playing, or engage in a group playdate. Of course watching siblings play is a great way for them to learn the concept of playing.