We might visualize a distinction as a folded sheet of paper. As we fold a sheet of paper, we make a distinction. As a first-order observer, we can only see one surface at a time, though we know there are two–just as a system knows there is an environment (the other) but doesn’t know what it is or what it “contains.” In other words, systems are capable of self-reference and other-reference. The unseen side, the other, is the unmarked side. Prior to the folding of the paper, there is no this/that distinction.
All the first-order observer has access to is the factual dimension, which says A is A and not B. For instance, the legal system can say, “This is a legal issue, and that is not a legal issue.”
A second-order observer brings in the temporal dimension and observes the first-order observer turning the paper over to see one side and then the other but never both sides at once; which is to say, the second-order observer observes the before and after. The second-order also brings in the social dimension, which has to do with double contingency. But these ideas are discussed elsewhere.