I've done three or four 7-6 observations in this marking season, Joe. Don't worry - the observer is not there to catch you out, and at this level, it is more coaching than observing.
He'll be looking to see that you can apply law correctly (with regards to offside, fouls and misconduct, etc) and that you can identify what is and isn't a foul! He'll be looking for you to maintain a good level of control over the game (and what you do to keep it) and how you react should the tempo of the game change. Apart from that, he'll be looking to see you adopt the correct positions at dead ball times, and that your fitness and movement is good enough for the game you're refereeing, to get you in the positions you need to be, to see the things you need to see!
After the game, they'll come in and check the cards you've shown, as well as ask questions to clarify anything that was unclear from the touchline. Then they'll give you roughly three things you did well, and three things to think about for the future.
Best of luck mate!