Conewise linear systems are dynamical systems in which the state space is partitioned into a finite number of nonoverlapping polyhedral cones on each of which the dynamics of the system is described by a linear differential equation. This class of dynamical systems represents a large number of piecewise linear systems, most notably, linear complementarity systems with the P-property and their generalizations to a fine variational systems, which have many applications in engineering systems and dynamic optimization. The challenges of dealing with this type of hybrid system are due to two major characteristics: mode switchings are triggered by state evolution, and states are constrained in each mode. In this paper, we first establish the absence of Zeno states in such a system. Based on this fundamental result, we then investigate and relate several state observability notions: short-time and T-time (or finite-time) local/global observability. For the short-time observability notions, constructive, finitely veritable algebraic (both sufficient and necessary) conditions are derived. Due to their long-time mode-transitional behavior, which is very difficult to predict, only partial results are obtained for the T-time observable states. Nevertheless, we completely resolve the T-time local observability for the bimodal conewise linear system, for finite T, and provide numerical examples to illustrate the difficulty associated with the long-time observability.