After the commercial break, Walter, on the phone, can't explain it either: "If the corridor were sealed at this end, then a black hole must have manifested in the other. The Observers on that side would have been sucked into the vortex, their operation crippled for years. It should've worked. It must've worked," he says. Come on, Walter! For all you know, it did work and this shipment is coming through from a time years after the last one, but being sent to the same time in the present! Goddamn, time travel makes television and movies dumb sometimes.
An angry Peter stomps off "to get answers," and Olivia chases after him but he's gone pretty much instantly. Olivia's left by herself to notice pictures of Etta on poles and buildings, "RESIST" in large letters alongside her. She's literally a poster child for the Resistance now. Olivia must be so proud!
Over at Anil's hideout, Peter goes stomping in, telling Niemann to take a hike and grabs some plastic sheeting from the wall, which he wraps around the Observer's head. The Observer struggles, but he's powerless to stop Peter from doing anything, and Peter keeps him under wraps for several seconds. Finally Peter lets him go and asks why it didn't work. "You don't even know what you don't know," says the Observer, who recovers pretty much instantly. He sounds almost amused when he reminds Peter that his friend was correct when he warned him to dig two graves before going on a journey of revenge: "Emotions get in the way of judgment."
Peter sticks his gun in the Observer's chest and yells that emotion did not get the better of him. No... it's obvious that Peter's thinking completely clearly. "I read your tells to help me assemble the device," Peter says, at which point the Observer lectures him on his interesting but highly antiquated assertion, which at any rate doesn't even apply to them. And then he explains to Peter what really happened when his pupil dilated, which was that he spotted a fly on the wall and as his cerebral cortex registered it, there was a small irregularity in his heartbeat, which caused a slight deregulation of the oxygen to his brain which in turn affected his oculomotor nerve. Thus your busted flush, so to speak, Peter.