As someone who builds observability tools for embedded software, I am flabbergasted that you're finding a more tools-friendly culture in embedded than in distributed systems!
Most hardware companies have zero observability, and haven't yet seen the light ("our code doesn't really have bugs" is a quote I hear multiple times a week!).
My experience with mid-size to enterprise is having lots of observability and observability-adjacent tools purchased but not properly configured. Or the completely wrong tools for the job being used.
A few I've seen recently: Grafana running on local Docker of developers because of lack of permissions in the production version (the cherry on top: the CTO himself installed this on the PMs computers), Prometheus integration implemented by dev team but env variables still missing after a couple years, several thousand a month being paid to Datadog but nothing being done with the data nor with the dog.
On startups it's surprisingly different, IME. But as soon as you "elect" a group to be administrator of a certain tool or some resource needed by those tools, you're doomed.
Most hardware companies have zero observability, and haven't yet seen the light ("our code doesn't really have bugs" is a quote I hear multiple times a week!).