Observer only "cuts" redstone dust visually, not logically
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.