When using the obsever it updates on other blocks that it should update on.
PHOTOS ARE COMING
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Could you take another screenshot with a different angle? I can't reproduce it because I have no idea how exactly your flying machine is built.

There is the photos in new angles.

Here is another photo.
I used sticky pistons on both sides. To make it a two way flying machine.

This flying machine worked did work in 0.15.0-0.15.3

So when it leaves it should go to point two. But it leaves and then after like 5 blocks it goes back to piont one.

Thanks for the screenshots. I confirmed it in 0.15.4 / iOS. This is indeed a mysterious behavior but might be working as intended:
Observer A (Oa) activates the piston A (Pa).
Pa extends by taking 3 ticks with pushing Ob and Pb.
Pa starts to retract. At exactly the same tick, Ob activates Pb so that it starts to extend. But since all of these happen in the same tick, there are 2 possible cases that can result in:
Pa retracts first so it successfully pulls back the slime block it just pushed. The flying machine goes back in this case. Or,
Pb extends first so it prevents Pa from pulling back the slime block. The flying machine goes forward in this case.
When there are multiple components to process in the same tick, PE 0.15.4 apparently randomizes the processing order unlike as in ≦ 0.15.3. That's probably why your flying machine stopped working in 0.15.4.

Could that be corrected? Sorry, but that had been the underlying cause of my bug too.

Confirmed for 0.15.90.2. (Tested on Pocket Edition.)

Affects 0.16.0 beta build 4 AKA 0.15.90.7.

I think this bug needs a better name. This isn't really an observer bug, its a piston-timing bug. It should be called something like "piston timings are inconsistent" or something like that so other people will be able to find the bug easier, as this is NOT even strictly related to observers, but all piston contraptions relying on precise timings.

I asked developers about this, and they said this one was WAI as I explained before, at least for now. They said that the current behavior is indeed confusing and might be changed in the future.
It's not timeline its timing.(look on the photo)