The observer updates when it is invalid.
TO REPRODUCE:
Place an observer facing downwards in the air.
Put a sticky piston on the 'outputting' part of the observer.
Put a string of 3 pieces of redstone (one being underneath the observer face).
Break the second piece of redstone and see that the piston extends and retracts.
It is an invalid update.
The observer is reacting to the redstone below it changing shape due to the redstone next to it being removed.