If you do not suspect any sort of abuse, her observing him urinate is not that uncommon.
You have done well ignoring the behavior for now (you do not want to feed into it or rouse her anxiety by shaming her making her feel guilty) She may have also seen a boy her age doing this at some place (playground, park, etc)
At this age you can start teaching her about good touch and bad touch and how body parts differ in each gender.
Amazing You!: Getting Smart About Your Private Parts by Gail Saltz, et al. (Paperback - Jan. 31, 2008)