You may have noticed that your dog keeps his eyes on you while he is defecating. It is not because he is embarassed nor wishes you would give him privacy while he 'does his business'. It goes much deeper than that.
Dogs are animals and are very aware of their environment and their place in it. Defecation is one of the times in an animals life when he is terribly vulnerable. He must posture to perform this task, and because of this, he is not in a position to either fight or to run away. In fact, it would be terribly difficult either to defend himself or to escape danger while he is eliminating. Your dog is instinctively aware of his defenslessness.
But your dog also knows that she is part of your 'pack'. You are part of her family group. And she is counting on you to give her a body language signal or a 'heads up' if she should be afraid. She may also expect that you will defend her if the need arises. If you should suddenly leap away, your dog will respond also.
Also, some dogs won't defecate if some is watching (or on a leash) They may feel safer away from his home turf where he will not draw attention. Instincts dictate your dogs' reaction to his own helplessness during this awkward time.
Whichever way your dog reacts, its good to know he's just doing what comes naturally. Try to honor her wishes as long as it is safe to do so, try not to do anything to startle her while she defecates if she is watching you. Honor her wish to be away, and modify the environment to accomodate her as much as possible.
Dr Kathryn Primm (I heart dogs) 9/25/2014