Three short lines carry a surprisingly heavy thought. The first, "the state is a great eater," sets up the state as something hungry, a huge appetite that consumes whatever is put in front of it. The poem doesn't say what it eats, so the reader fills in the gap: perhaps freedom, privacy, people, attention.
The speaker then turns to themselves. "I see more and more" suggests an observer who is taking in a growing amount, yet the next line undercuts it: "but am wholly unable to look." Seeing happens to you, while looking is a choice, an act of facing something. The speaker notices everything and still can't bring themselves to face it.
The mood is uneasy and quietly helpless. The title, "Observer," adds to this, since an observer watches without acting. The poem seems to suggest a kind of guilt or paralysis, a person overwhelmed by what they see and held back from really confronting it. Its brevity makes the unease feel sharper.