The theory of evolution does not say that a frog would ever evolve into a dog. I think the problem people have with understanding evolution is not so much how it works, but rather its about the amount of time it takes, once one can comprehend this, I think it makes a lot more sense.
Everything that is living today or have ever lived are one of two things. 1 A transitional species or 2. Extinct.
Since being extinct is not all that interesting, things living today are all transitional species, including humans. This means that you will never see a frog become a dog as these are not in the same family branch, one is a mammal and the other an amphibian. Just as you are not going to suddenly see a dog turn into a tree.
What the tree shows and what evolution tells us, is that each of these families both within a family and between families have common ancestors.
So what we might see in a very very long time, is that from mammals we will have a completely new branch, lets call it "Terrialians" for lack of better word, but that itself is not a mammal, but rather something which shares a common ancestor within the mammal branch with all over Terrialian beings and whatever might branch off from here as well. Just as you can see how fish in the above image have branched into reptiles, mammals and amphibians etc. Which also means that none of these are fish, but rather shares a common ancestor with each other that were a fish, if we track back far enough in time.
So a dog might evolve into a mixture of a dog and a terrialian being, that eventually will make these terrialians no longer able to breed or even look like their dog ancestors or share any significant features with mammals.
To get a better explanation and concentrating on just one species out the millions of one that have lived. I suggest that you watch the following short video about the evolution of whales, and how and why we have gotten to know that evolution is true and what evidence there are for it, or at least just some of them.
Science depend on a lot more than merely observations, that is just part of the "toolset" that is used. If you look at how the scientific method is applied in this handy overview.
Observation could simply be one part or method for conducting an experiment in the
"Test with an experiment".
Also there is a huge difference and unfortunately misunderstanding of the word "Theory" when it comes to evolution. This is partly due to how the scientific community name things, won't deny that.
But to quickly explain it with another well know theory,
"The theory of relativity" which would also just be a theory, just as evolution, if one do not know what is meant.
Both the
"The theory of relativity" and
"Evolution theory" are not meant to be understood as theories as they are used in common language, like me saying that
"I have a theory, that if I jump very high and land on the ground, that I will cause an Earthquake on the other side of the Earth". Both of the above theories, are scientific theories whereas mine is just an idea.
In science, if you look at the above chart, this would basically be either the
"Ask a question" or the
"Construct a Hypothesis", were we to alter my idea about jumping above, slightly.
Depending on all the experiments and results discovered by keep repeating the above chart, you will eventually get a lot of data and others might conduct their own experiments as well and share their results.
This will eventually make you end up with a lot of facts about how things works.
Like dropping a rock here on Earth will make it fall to the ground, this we can refer to as being a fact.
However simply knowing that something is a fact is not all that interesting when it comes to science. Which is where the word
"theory" comes into play, in fact, this is known as a
"scientific theory". Which means that it is a theory that explains the facts and makes it, so if something is known as a scientific theory, it doesn't really get any better within science, as we now know why things work the way they do and we can explain them.
Which is why both
"The theory of relativity" and
"Evolution theory" are not just theories, but are "scientific theories". And when you look at it, evolution theory is probably the most tested theory of all those we have today, and still it remains as strong as it does. Which means that it is a rather good one, in my opinion at least.