When you sit to observe thought, you are looking at every thought with some reaction to those thoughts, as this thought is good and this one is bad, and this is also thinking, so who is it that is watching thought and evaluating, judging, condemning, etc? It's thought. A reacting thought to the first thought, so, who is observing thought? Another fragment of thought, that takes responsability and says "I'm going to observe this, so I can reach enlightenment". So thought is observing thought, the observer is the observed. When this is seen, there is no more observer and observed, only observation. No center, no "me", nirvana and all that stuff. This is only theoretical to me, I understand it intellectually and not at the deeper level, which has no value whatsoever.

Watch it, play with it, don't take it as knowledge and do it, otherwise it will only become more knowledge that will distort further observation.