Observation cars became a fixture on passenger trains with the development of the heavyweight passenger cars in the early 20th century (these heavyweight versions became very famous for use by presidents or presidential candidates when they used to campaign heavily by train). These early observations featured rear-end platforms (porches) with overhanging roofs. However, it wasn't until the streamliner era that the observation is best remembered. With the development of lightweight, streamlined equipment, observations completed the look with almost all designs featuring a type of rounded end. Today, Amtrak has abandoned the use of observation cars although you can still ride aboard one by visiting one of the tourist railroads around the country which operate them. Despite this setback, you can still experience a long-distance journey over the rails in an observation thanks to the new Pullman Rail Journeys.
Observation cars helped to increase passenger train travel popularity as an additional means of enhancing the journey. They were almost universally located at the end of the train to make the trip more enjoyable and usually featured a lounge area and/or sleeping compartments although some cars were also used as diners. Later during the streamliner era designs, such as those used aboard the California Zephyr, featured domed observations for a maximum viewing and sightseeing experience. Other trains may have been more luxurious and for the well-to-do but none could compare to what the California Zephyr offered in the way of friendly service and breathtaking scenery.
Operated jointly by the Chicago, Burlington & Quincy (the Burlington Route), Denver & Rio Grande Western, and Western Pacific the train traveled through some of the most spectacular scenery in the country and it was not surprising that it continued to do well even when train travel by the 1960s and 1970s was waning with the public. The train would eventually be operated only by the Rio Grande (which was then renamed as the Rio Grande Zephyr) and after it relinquished the train to Amtrak in the 1980s it was not only retained but also returned to its original name and today the CZ remains one of the most popular long distance trains in the country. Some railroads chose to design or build their own observation cars, most notable was the Chicago, Milwaukee, St. Paul & Pacific (the Milwaukee Road). When the CMStP&P introduced the regional streamliner, Twin Cities Hiawatha, in 1935 the train operated a unique "Beaver Tail" observation, which featured a sloped rear end thus giving the car its unique name.
Then, a decade later in 1947 when the railroad introduced the transcontinental Olympian Hiawatha the train featured perhaps the most exotic observation car ever built, the famed Sky Tops. Configured as sleeper-lounge cars the Sky Tops were designed by industrial designer Brooks Stevens with the rear of the cars featuring a beautiful solarium lounge that afforded passengers unprecedented views of the outside world. Domed observation cars were mostly featured on passenger trains of the western railroads due not only to the wide open vistas afforded but also because height restrictions were not such an issue as they were back east, making dome cars in general rather rare (although railroads like the Baltimore & Ohio made use of them the best the could by reducing the height of the domes).
With passenger rail travel waning in the 1960s railroads began to cut back on the service where and when they could. As a result, save for a railroad's most prominent passenger train(s), most runs that operated observation cars lost the service to curb operating expenses. Until the end, however, when Amtrak took over intercity passenger rail operations in the spring of 1971 some railroads remained determined to provide top quality service on their trains such as the Rio Grande's then Rio Grande Zephyr, the Southern Railway, and the Baltimore & Ohio. With the startup of Amtrak the carrier continued to use observation cars in a limited capacity on some its trains.
However, the company would eventually park all of its handed down observation cars and removed them from service altogether. In general and perhaps the easiest way to ride aboard a true observation car today, either a heavyweight or streamlined version, one must find a tourist railroad that operates such a car like the Western Maryland Scenic Railroad, Strasburg Railroad, or Napa Valley Wine Train. Additionally, however, there is Pullman Rail Journeys which has brought back full Pullman services in 2013 to select Amtrak trains. Among the amenities offered are observations, diners, and a full staff.
For more reading about observations the book American Passenger Train Equipment: 1940s-1980s by author Patrick Dorin provides a very nice general history of classic car types used in service (predominantly during the streamlined era) featuring many drawings and detailed information on several. Also, the book The Cars of Pullman from author Joe Welsh, Bill Howes, and Kevin Holland. As the title implies the book details and highlights the various types of cars Pullman built throughout the years, along with giving a general history of the company in the process.