Does anyone actually go out and people watch?

I do.

I'm always looking, listening, observing. I write stuff down in WorkFlowy, using my phone.

Last week, I was sitting outside an arena, waiting for my husband to walk back from the car (He left the Journey tickets in the visor.) There was a fabulous pink-and-gold sunset over the old Amtrack station, with a leafless tree silhouetted in the foreground. I took a picture, made a note about a setting in a local story.

From a group walking across the street, I heard a woman's voice say,"But where do you get that much chicken poop?" Hmnn, where do you?

A group of college boys passed where I was sitting. Every one of them scanned me, then looked away. (Female, blonde, old, pass. I could almost see the tickboxes being marked.) Interesting observation from one of my older protagonists, possibly.

I watched my husband walking back. He looked strong, confident. handsome. He would have caught my eye even if I didn't know him. Feelings jotted down for romance insight.

All of these things in the real world can populate my created worlds. Some of them can (and have) inspired stories. Some of them find their way into atmosphere, or setting or characters.

As much as I deeply desire to become a hermit and stop subjecting myself to people's judgement, pettiness, unreasonableness and randomness... without them, my writing would be a lot duller.

Oh. I'm seeing a marketing idea here.

Print up business cards with a QR code for your website and the words "You might be a character in one of my books."

Hand them out to people.

They may be curious enough to buy your books to see if they are in there.

SCORE!

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I'd people watch more often if busy places (and the possibility of others watching me) didn't make me so uncomfortable. That said, I tend to do it instinctively when I'm out so long as it's a good environment, but I've never tried to make a story centered around them or anything. I think the most interesting part of people watching is to get the details you otherwise would have had to imagine.

What kind of quirks do people have? What other gestures do they use? There's more than just tapping your foot or twirling your hair when bored. There's more than waving your hands around like an Italian when you're excited. Watching others gives you greater insight into that. How do people interact? You'll never fully understand how all people talk to one another even with those kinds of observations, but you can get some greater insight into the way tone and content change based on who the speaker is directing their conversation towards and who the speaker is in the first place (i.e., variances of spoken respect between different races and ages). What do they talk about? You may never imagine talking about your favorite erotica loudly in a restaurant, but more people than you think may do so. Others may discuss the politics of Nazism or their nephew's arrest. Others may not talk at all even with a full family there. How do they react to little things? Maybe a waitress spilled the drink. One man may offer to clean it up while some old woman may start screaming at her insisting their check is paid for; you'd be surprised how different reactions are than what you'd expect based on their appearances.

Many of the things you think are socially unacceptable will turn out to be common while things you believe are common courtesy are ignored. It makes it both interesting and insightful to listen in and watch others in a non-creepy, non-intrusive way. If not as a writing resource, it's fun to see how different other people are from yourself as well as to judge where your own morals line up compared to actual people. I've gotten a lot of inspiration for the smaller details of my characters from things like this.

Finding really cool people is also a great result of people watching. There's this lanky old man in our area who I've spotted a few times in my ventures whose story I just want to know incredibly bad. He's got this long gray hair back in a pony tail, chewed up clothes, a dirty backpack, and moves only by bicycle. The way he moves is so calm and confident that it's almost hard /not/ to watch (and harder to interrupt, partly why I haven't spoken with him yet). There are also others who blend very well into the background but are actually very interesting on closer observation. You'd think a woman in a giant bird hat would stand out, but some people just have such a lack of presence that you don't even notice them unless you're people watching.

tl;dr: People are weird.