Has a chance to spawn when a hollow tree is destroyed. Will act as a noncontrollable pet creature for a limited amount of time if you say "follow me" to them.
If you talk to him, does he become your pet and help you fight?
Yes, the observer will follow you:
[Tue Feb 02 09:13:43 2010] A timid wood elf emerges through the flaking bark of the hollow tree, its hiding spot discovered. [Tue Feb 02 09:13:43 2010] You slash a hollow tree for 202 points of damage. [Tue Feb 02 09:13:43 2010] You have slain a hollow tree! [Tue Feb 02 09:13:43 2010] a concealed observer says 'No! Wait! Please don't hurt me! I was hiding from those geomancers! They were after me. I only received a minor wound before I got to a hiding spot. It only itches a little. Wait, I know! I'll help you along your way! There's no way they'll try to come after me if I'm with you! What do you say? Can I come along?' [Tue Feb 02 09:14:09 2010] You say, 'Follow.' [Tue Feb 02 09:14:09 2010] a concealed observer says 'Whew, you don't know what a relief this is. I'll make sure to follow close. Lead on!'