This bug is caused by fixing MC-4923.
Previously players used flint and steel to activate buds and observers without placing blocks. Since 17w48a this feature was removed. I know it looks like intended behaviour technically, but I think removing worldwide used feature, even when basing on bug, was not intended.

The difference between removing this feature and fence-starter of item elevator is that there is no other method to manually activate observers than flint and steel, when item elevators can be easily redesigned.

In this case I have to ask mods to not close this report and leave it for devs to check it out. This is not the first time when bugfix removed/broke feature. There are examples of rollbacking bugfix or readding feature as exception.