A UA observer is a second person standing directly beside the remote pilot who keeps both the drone and the surrounding airspace in unaided sight, warning the pilot about approaching aircraft or other hazards. Crucially, the observer watches the sky, not the screen.
The observer's presence is the only way FPV flying is permitted in the open category, where the pilot's own eyes are inside goggles or on a screen. "Beside the pilot" means direct, unmediated voice contact — talking over a radio or a phone does not satisfy that requirement.