Windows 10, Java 1.8.0_25 64bit
Observers power strongly through blocks, but they don't update whatever is being powered.
To recreate, see screenshots, and press the button.
Gif of the bug: https://gfycat.com/BrownWanAmazondolphin
Observers do not update blocks at the required distance. This leads to new BUD behaviour.
Pistons don't receive activation power from blocks in front of Observers like MC:PE (Please read description before resolving)
Observers can "BUD" redstone dusts
Observers don't power blocks strongly
Observer Strong power blocks
Oberserver block powers air blocks
Blocks given redstone power do not power nearby redstone until the wire is updated