Find the telescope that belongs to the tower and peek into it.
In order to activate the event, Head to the Watch Tower and make your way up to the top where a wooden tower can be found. Climb the ladder and jump on top of the roof, where the telescope is. Pick it up to activate the event.
Jump into the tower again and walk up to the middle of the tower where the telescope can be placed. Use the telescope from the Item Screen to place it there. Now peek through the telescope to clear the event.