The Observatory is the heavenly home of the Celestrians in Dragon Quest IX. It is located high about the Protectorate and is accessible only by a portal, or the Starflight Express. The Yggdrasil Tree is located at the pinnacle of the Observatory. The Observatory is equivalent to Zenithia in the Zenithia trilogy.
In the beginning of the game, the hero and their mentor, Aquila, are seen protecting two innocent humans; Erinn and her grandfather. They are soon made targets for an ambush consisting of a Cruelcumber and its two Slime friends. After a battle with Aquila's assistance, they are rewarded with a crystal of Benevolessence from Erinn's prayer. The hero and Aquila then return to the Observatory, as the hero must report to the head of the Celestrians, Apus Major. Aquila informs the hero that he has business to attend to, so he leaves. The hero then makes way to the second floor of the Observatory, where Apus Major requests them to give the Benevolessence to Yggdrasil, who is rooted at the top of the structure. When the hero bestows the Benevolessence to the majestic World Tree, they return to the protectorate, upon the request of Apus Major(?). Their new task is to collects a few more crystals of Benevolessence and then gift them to Yggdrasil. During their job, Aquila visits Angel Falls and the hero. He informs the player that there is a ghost lurking about and asks them to help it into the afterlife. Once this is done, the last crystal of Benevolessence is claimed, and the hero is taken back to the Observatory. Here, Yggdrasil is given the collected Benevolessence, with many Celestrians watching. An FMV occurs in which we see the hero, Aquila, and Apus Major witnessing the creation of the divine Fyggs; heavenly fruit with mysterious powers. However, the Observatory is struck by a bolt of dark energy, and the hero descends into the Protectorate, along with the Fyggs. This begins the true story of the game.
After the events in Coffinwell, the hero is taken back to the Observatory with the help of his new companion; Stella. During events prior to this point in the game, the hero witnesses a frightening nightmare. In it, a dark cloud is seen, and the hero hears a strange voice that informs them that of one their own will try to destroy mortalkind. However it also tells that one will save them. The hero visits Apus Major and informs him of the nightmare. Apus Major then says that the player must collect the fallen Fyggs and bring them back. The hero, accompanied with Stella, then descends back into the Protectorate.During the next visit to the Observatory, the hero rushes to Apus Major and informs him of a betrayal and theft. The wise Celestrian proves him wrong and tasks the hero with the deliverance of the Fyggs. Once this is completed, the hero is attacked as he descends back to the Protectorate. This can be considered the "last" visit to the Observatory.
Judging from the two times that the hero falls, it is above the region between Angel Falls and Wormwood Creek. Probably closer to Angel Falls since the first time hero falls from the Observatory right into the lake in Angel Falls, while the second time hero falls from Starflight Express to the river in Wormwood Creek on his/her way to the Observatory.