Just my two cents
according to Peter, Walter was one of the “First People”. He put the machine thousands of years in the past so it could be found. He may have even built it (which would make sense since Peter and Olivias DNA could start and stop it]. My guess is that is where the two universes divurged as well. The Walternate universe was always 30 or so years ahead of ours…
So… what happened to Peter? It’s not like he wasn’t real; he was what started the whole war between the universes thing. Did he (somehow) erase himself from the timestream? What did the Observers mean when they said “his purpose was done”.
Peter didn;t start the war. Walter getting Peter did. as well as Bell’s subsequent actions. Not exactly sure why he dissapeared, however, it may be once he “merged” the two universes he was “cancelled out”. (he was the only one without an “opposite”). The question will either Walter or Walternate or Olivia or Fauxlivia be at some point next season reminded of him and have to against the Observers and separate the two universes and bring back Peter.
Who are the Observers anyway? Where are they from? They don’t seem to belong to either Universe.
The Observers kinda remind me of Uatu, The Watcher in Marvel Comics. He’s just supposed to watch and record, but he’ll tell a hero from time to time what the real deal is. Maybe “guide” them to make the right choice. Maybe they are keepers of the timestream this is how they were gonna fix it…