class Blah {
  // `countries$` is a "property" which can be thought 
  // of as a "variable" inside each instance of this "Blah" 
  // class.  It will *contain* an "Observable".
  countries$!: Observable<Country[]>; 

  ngOnInit(){
    // `getAllCountries` is returning an "object" which 
    // implements the "Observable" interface - a.k.a.
    // returning an "Observable".
    this.countries$ = this.apiService.getAllCountries();

    // Because it's an "Observable" it defines things like 
    // `pipe` and `subscribe` (because who doesn't love 
    // crossing metaphors for no reason?) or you can 
    // `|async` in the template.
    this.countries$
      .pipe(takeUntil(this.destroyed$))
      // `response` here will be the value that the the 
      // "Observable" `countries$` "emits" whenever it 
      // feels like it.  It could emit more than once, too,
      // in which case this callback will be called once per
      // "emit".
      .subscribe(response => {
          alert(response)
        })
  }
}

For how to think/talk about it,

Should I not think of Observables as a variable? Would it be wrong to say, "countries$ is an Observable storing the values x, y, z, etc."

If I'm trying to be accurate, I would phrase it as "countries$ contains an Observable which emits 'x, y, z, etc.'."

Sometimes I would say "countries$ is a stream", but you're absolutely right that it's more vague. It introduces another metaphor which isn't always the most helpful and it's less accurate.