An observer placed in the position shown in the screenshots should prevent redstone dust below it from connecting to redstone dust beside it on top of a solid block, upside down stair, or top slab. Visually it behaves this way (the redstone dusts do not configure themselves to point to each other), but logically it allows a redstone signal to pass between them. In other words, it behaves like glass, logically, when it should behave like a dropper or dispenser..

*Expected behavior:*
Redstone dust should not power redstone dust on top of an adjacent solid block, top slab, or upside down stair when a full-block mechanism component is above it.

*Actual behavior*
Redstone dust behaves as expected when a dropper or dispenser is above it, but when an observer is above it, it allows the Redstone dust to transmit power "through" the observer. In the case of a solid block, it can be transmitted either upward or downward. In the case of a stair or top slab, it is transmitted only upward.