They had an observation post through which they could look at the movements of vessels in the bay. Naturally, it wouldn't be the most detailed information, but something like "a whole fleet of big German warships have entered" would be extremely valuable to know. The British navy could strike somewhere else, knowing that these ships were far away, or they could see if they can ambush them or prepare defenses in the mediterranean.
Anti-Air Searchlights at the Rock of Gibraltar, WW2, 1942 (lemmy.world)