or do they belong in their own place?
I agree with the convention, but when you find you've got a lot of observers in app/models, you might want to go ahead and store all your observers in app/observers. (There are also some gems to help streamline your design).
Just remember to add app/observers to your app's configured load path.
If you generate one (e.g., "rails g observer Test") that's where it goes, so I'd stick with the convention.
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