What is the difference between Observer and Member roles?

The role "Member" under "Settings – People and teams" means a standard full user who can log in and needs to fill in a weekly report via the form. They also get weekly reminders to fill in their report. Member names are shown on the left hand sidebar.

Another more limited user role is "Observer." They do not have to fill in the report and they are not shown in team reports and web sidebar. They can still read the report on the web and mobile and they receive the compiled reports via e-mail.

A user can belong to multiple teams. That makes most sense if some of your teams are private, visible only to team members, and you want to give access to someone who already is in one team as a Member. Then add them as an Observer in another team.

If you just want to have someone receive the team or company reports via e-mail, but not log in via the web and mobile, you can add their e-mail under "Settings – E-mail reports".