While walking down the street of an old town, caleb notices a burnt sign. even though most of the words in the sign are illegible, she is able to piece together that the sign is pointing to the town hall. in this scenario, the gestalt principle of accounts for this phenomenon?

I believe the answer is: Closure

According to the principle of closure, individuals would see incomplete words or picture as a whole by filling the visual gap with their own personal perception.
The personal perception is created based on individual cognitive reasoning and could be analyzed to determine the way people think/behave.

That is true , instead try to have a sit down talk with them