A crow's nest is traditionally a platform high up on the mast of a ship, occupied by one or two unlucky sailors whose job it is to freeze their hindquarters off while looking around for any suspicious entities, in or out of the water. It's generally a bad thing to sleep while on duty in a crow's nest, because otherwise you might miss something (the Titanic is probably a good example, though that may not have been so much of a timing issue). However, crow's nests have been made virtually obsolete with the technological capabilities of modern naval craft. If anything, they are there for the sake of tradition, and are rarely manned (though there may be military standards, so feel free to correct me).

A note from karma_debt: Watches for all sorts of things (even archaic things) are still manned by most Naval ships, and other militaristic things... the military thrives on silly, archaic, yet traditional things.

Source: Dictionary.com

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