Mmmm what a subject!
For me there's many aspects...
Definitely the excitement in advance, the days and hours leading up to my exam, oh my those are spine tingling.
The embarrassment is huge for me, to the extent that I have come to realize those feelings of embarrassment heighten my sexual response immensely. Not so much shame (that's quite a negative feeling for me).
As to observing such a situation, I have never had the chance to watch someone else get examined, but would love to. When I've examined another person, the act of not only touching and interacting with the patient but also sort of watching myself do the exam... the visual aspect is so powerful. I've fantasized about observing my own exams, like, I'd love to watch Grace the patient be examined by someone else. It's probably why I played in front of my mirror so often when I was younger.
As to the physical element, the touches & penetrations are exquisite when done firmly but gently, repeatedly, in all the intimate areas.
Is it sex? This has been an issue for me my whole life. I'd grown up with the idea that intercourse (penis in vagina) is what sex is... at least that's what kids discussed in high school and in college too. But as my world opened up, I realized not only that I didn't like such intercourse and but that there's so much more to pleasure than that, to my great relief. So for me, I've decided sex is whatever a person decides. At this point I really don't use the word 'sex'. And I've yet to fall in love for real, so maybe things will change as I grow older. For now, I do what pleases me and my partner(s).