"Observation" is really a terrible word for it. The correct word is "interaction." Basically if you mash two particles together you can destabilize and mix ("entangle") their wave forms. Then when you split them up again the universe "forgets" which one is which for a second. When one of the particles gets bumped by something (like a photon bouncing off it to measure it, hence "observation") the universe goes "aha! it's that one!" and collapses the wave form of both particles so that they continue to match according to the laws of physics. If one particle was entangled with an excess of energy, then the other particle will "receive" that energy when it collapses, instantly and across any distance, because from the universe's point of view the second particle must have had that energy with it the whole time or physics would have been broken.

Think of it like the universe has an error handler that makes sure the laws of physics always get obeyed, and quantum processes like this are just us tricking the error handler into activating so we can watch it do interesting things. Its like Rollback Netcode but for physical matter.