What are they observing? That a man (who claimed to be God) died on a tree? Did their version rise from the dead?
The best explanation that I can give you of the Jehovah's Witness belief:
That God's son who is the only being created directly by the Father took the form of a man and died a sacrificial death to break the curse of Adamic sin. When he died he was non-existent, but held in the Father's memory so that his life-pattern could exist again in spirit form.
Though Jesus neither commanded nor blessed any holidays, he did tell us to observe this and only this.