The Data Observatory is a tool used to normalize data, which helps minimize the influence of population on maps and reveals true insights. By using SQL queries with the Data Observatory, users can aggregate data by counties or other geographic boundaries, reducing clutter and noise in their maps. Normalizing data allows for more accurate analysis, such as calculating tweets per person in each county, providing a better understanding of the impact of social media campaigns. The tool enables users to apply normalization to various datasets, including geodata, making it easier to create meaningful projects with unique insights.