In a bus service notice, it is written that "Buses will observe the bus stops on the diversion at Crown Street" What does "observe" mean here? I can't find any meaning in dictionaries which suit such a use. Please.
Meaning 2 in the Wiktionary entry for observe is the one you want:
(transitive) To follow or obey the custom, practice, or rules (especially of a religion).
The first example is:
Please observe all posted speed limits.
Here, the meaning is that the buses will stop at the bus stops on the diversion route.
This seems to be transport-operator jargon, and not something one would expect in spoken English, or in a well-written newspaper article. It's an example of the kind of "up-writing" we see when the author feels they need a more formal register, and believes this should be effectuated through illucidity.