feat(observability): use human-readable log format for terminals

When stdout is connected to a TTY, use tracing_subscriber's pretty
format with colors instead of single-line JSON. Non-TTY (container
logs, pipes) continue to output JSON for log aggregation.

Override auto-detection via APP_LOG_FORMAT=json|pretty.

Also adds APP_LOG_PRETTY=true to use serde_json::to_string_pretty
for human-readable JSON output (useful for development/debugging).

libs/observability/src/msg_json_fmt.rs

@@ -156,7 +156,13 @@ where
             ordered.insert(key.clone(), value.clone());
         }
 
-        write!(writer, "{}", serde_json::to_string(&ordered).map_err(|_| fmt::Error)?)
+        // Use pretty JSON for human readability in terminals, compact for pipelines
+        let json = if std::env::var("APP_LOG_PRETTY").as_deref() == Ok("true") {
+            serde_json::to_string_pretty(&ordered)
+        } else {
+            serde_json::to_string(&ordered)
+        };
+        write!(writer, "{}", json.map_err(|_| fmt::Error)?)
     }
 }
 

libs/observability/src/tracing_fmt.rs

@@ -1,18 +1,21 @@
-//! Tracing subscriber initialisation with JSON output.
+//! Tracing subscriber initialisation.
 //!
-//! Uses a custom `MsgJsonFormat` that injects `_msg` as the first field
+//! Terminal (TTY): human-readable format with colors
-//! for VictoriaLogs compatibility.
+//! Pipeline (non-TTY): JSON output for VictoriaLogs
+//! Override via `APP_LOG_FORMAT=json|pretty` env var.
 
 use crate::msg_json_fmt::MsgJsonFormat;
 
 use once_cell::sync::Lazy;
+use std::io::IsTerminal;
 use std::str::FromStr;
 use tracing_subscriber::{
-    fmt::{self, format::FmtSpan, Layer as FmtLayer},
+    fmt::{self, format::FmtSpan},
     layer::SubscriberExt,
     util::SubscriberInitExt,
     EnvFilter,
 };
+use tracing_subscriber::Layer;
 
 /// Global instance identifier, resolved once at startup.
 /// Priority: `INSTANCE_ID` env var → system hostname → `"unknown"`.
@@ -34,23 +37,42 @@ pub fn instance_id() -> String {
     INSTANCE_ID.clone()
 }
 
-/// Initialises the global tracing subscriber with JSON-formatted output to stderr.
+/// Determines the log format based on environment and TTY detection.
+fn use_json() -> bool {
+    match std::env::var("APP_LOG_FORMAT").as_deref() {
+        Ok("json") => true,
+        Ok("pretty") => false,
+        _ => !std::io::stdout().is_terminal(), // TTY → pretty, non-TTY → json
+    }
+}
+
+/// Initialises the global tracing subscriber.
 ///
-/// Each JSON line includes `_msg` (first field), `timestamp`, `level`, `target`,
+/// TTY terminals get human-readable output with colors.
-/// `file`, `line`, and structured event fields.
+/// Non-TTY (pipes, container logs) get JSON for log aggregation.
+/// `APP_LOG_FORMAT=json|pretty` overrides auto-detection.
 /// `RUST_LOG` env var controls the log level filter.
 ///
-/// Pass `defer = true` when OTLP will be initialized afterwards via `init_otlp()`;
+/// Pass `defer = true` when OTLP will be initialized afterwards via `init_otlp()`.
-/// in that case this function only builds the subscriber without calling `try_init()`,
-/// and the combined (fmt + OTLP) subscriber is installed by `init_otlp()` instead.
 pub fn init_tracing_subscriber(level: &str, defer: bool) {
     let env_filter = EnvFilter::try_from_default_env()
         .or_else(|_| EnvFilter::from_str(level))
         .expect("invalid log level");
 
-    let mut fmt_layer: FmtLayer<_, _, _, _> = fmt::layer()
+    let fmt_layer: Box<dyn Layer<_> + Send + Sync> = if use_json() {
-        .event_format(MsgJsonFormat);
+        let mut layer = fmt::layer()
-    fmt_layer.set_span_events(FmtSpan::CLOSE);
+            .event_format(MsgJsonFormat);
+        layer.set_span_events(FmtSpan::CLOSE);
+        <_ as Layer<_>>::boxed(layer)
+    } else {
+        let mut layer = fmt::layer()
+            .with_target(false)
+            .with_level(true)
+            .with_ansi(std::io::stdout().is_terminal())
+            .pretty();
+        layer.set_span_events(FmtSpan::CLOSE);
+        <_ as Layer<_>>::boxed(layer)
+    };
 
     let registry = tracing_subscriber::registry()
         .with(env_filter)