It's a streaming feature
When you need to find some one or see how other players are playing.
Where i can find that feature ?
There are few ways.
On log in screen, right bottom corner, there is "Spectate other players" Button
Also it can be selected from game menu
It will open players selection window, where you can select a player to spectate, only if they allow you to.
Can other players spectate me ?
Answer is Yes, if you allow them.
It can be changed under game options.
Menu -> Game options -> Allow spectators On / Off
How i can stop spectating other players ?
Same way you enabled it, click at right bottom corner "show login window" or from right corner menu, select "Back to game"
Are there any other restrictions on spectating ?
You can't spectate players who are at PvP areas.