How Did Otohime Die?

Assassination. One day in Gyoncorde Plaza, the box holding all the collected signatures suddenly caught fire. In the ensuing confusion, Otohime was shot. As she fell to the ground, her sons immediately came to her side.

Why did Hody kill otohime?

The citizens are shocked by Hody killing their queen realizing they were tricked by him and how they pointed their anger at the human for killing Otohime. Hody states he paid that pirate off to burn the box of signatures and he shot Otohime in the confusion and killed the human to fool the island.

Did otohime Haki observation?

Otohime was a user of Observation Haki right from birth and this was seen when she dodged several bullets with ease. She could also understand the true nature of others, which shows a decent proficiency in this skill.