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Instead of just you watching yourself, suddenly a crowd is watching you. Your behavior now has to fit a standard or risk the crowd's ire. It's still only *your* standard because *you* created the panopticon but it feels "otherly".

The resolution of the paradox is "The Warden is You" which is similar to ideas of self transcendence and "you are your own worst enemy."

Realizing that you are the only one who can jail yourself doesn't magically make you free though. E.g. realizing that your child(or anything you 'create') is burdened with your shadow doesn't resolve the shadow.

Realizing that the concept of "me" is created by "me" is itself another paradox, the chicken/egg kind. Resolution requires splitting of different selves. E.g. higher/lower self, or ego/superego/id.

While these splits are useful for dissection and analysis they also create "sides". You split the wolf into two, call one side black, one side white, and see the world through the eye of their conflict.

A box is just a box. Whether you label it a prison or you label it a home doesn't matter to the box. Reality doesn't care about how beautiful or ugly the world looks from your point of view.

A rainbow isn't part of reality unless you include yourself as part of of reality. Trying to take out the observer from the system can improve scientific studies but it utterly breaks down models in which the observer is a crucial element.

The most "important" class of observer critical models are morality models. E.g. anything with good/bad like politics. Trying to be purely neutral just leaves you with scientifically rigorous toys. There's no way to objectively model without turning the model into a toy.