An “observation” suggests something that is generally true about the text, like an objective element of the plot or an image used by the author. For example, if we are writing about the Anglo-Saxon epic Beowulf we might make an observation about the way animal imagery seems to function for the Geat warriors. We might observe that while the Geats feature an image of a boar on their battle helmets (thus seemingly identifying with this ferocious animal), there are other moments in the text when the Geats shun vicious monsters (when they are reluctant to fight the dragon, for example.) Someone who has read the work carefully probably wouldn’t disagree with this observation; it refers to an image used by the narrator and a specific plot point. This observation does, however, pose a question or “problem” for the careful reader: what do we as readers make of this apparent contradiction? Why is this juxtaposition important for the narrative more broadly? What are the consequences of this juxtaposition on plot, theme, or character? So what?
An “argument”—your thesis statement— is your solution to this problem. The thesis answers the “so what” question by explaining the significance of the observation and explaining why an invested reader should care about this detail. For example, one might argue that the juxtaposition of the Geats ferocious helmets and their subsequent unwillingness to approach the dragon suggests an inherent difference between the warriors’ appearance (outward show) and their actions. This seems to be a theme in the work. The Danish coastguard who greets the Geats when they arrive in Denmark remarks that there is often a difference between “what is said” and “what is done,” and at the end of the epic, Wiglaf says that this discrepancy between word and action will ultimately impair the Geats' ability to protect their kingdom. A thesis statement could read: “The difference between the Geats ferocious appearance and their later unwillingness to fight fearful monsters like the dragon suggests a devastating discrepancy between their appearance and their actions—a discrepancy that is responsible for the deterioration of the warrior culture in the epic.”
It is important to keep in mind that your thesis statement should argue something with which a reader can disagree. If I argued the thesis above, the body of my essay would not only need to prove that there is, in fact, a contradiction between the Geats’ appearance and action, but would also necessarily provide additional textual examples of how this discrepancy contributes to the deterioration of the warrior kingdoms in the epic. And, I’d need to be aware that other readers might not see the same contradiction. For example, another viable thesis statement could read: “As clear from biblical references in the text, humans identify with animals over monsters because animals are more like humans. Both humans and animals were created by God and thereby remind men of Divinity; whereas, monsters are perversions of God’s nature and thereby indicate a diabolic presence.” Rather than suggesting a contradiction, the imagery on the helmet suggests a righteous identification with God’s creation and an equally righteous aversion to things that are not “of God.” These two thesis statements offer opposite solutions to the problem posed above; both are viable and could be supported with textual evidence; and both make points with which a careful reader could disagree.